Caesars Entertainment has agreed to sell its William Hill International non-U.S. operations to 888 Holdings Plc for £2.2 billion (US$3 billion). Caesars anticipates net proceeds of $1.2 billion after repayment of debts and other adjustments.
Caesars bought all of William Hill earlier this year for £2.9 billion, but made it known the corporate interest was only for U.S. assets so the U.K. and other holdings were there for the right bidder.
The acquisition brings 2 million active U.K. customers to 888. The deal, which makes 888 the third largest U.K. operator, will ramp up its portfolio, hasten revenue growth, generate savings of £100 million and enhance profits. Earnings per share could increase more than 50 percent in the first full year of operations from the purchase.
The purchase includes all of the technology and brands, and over 10,000 new employees. “As a result, the transaction critically enhances the scale and diversification of the business, particularly in betting,” CEO Itai Pazner said.
Ivor Jones, an analyst for Peel Hunt, believes 888 is diversified as is so the scale of the sale is far more important. noted that while 888’s success across a number of markets suggested it may already be suitably diversified, the scale it achieves through the deal would be more important, according to iGaming Business.
“The additional scale will most obviously provide cash from more mature markets to recycle into driving growth in the U.S. with the new Sports Illustrated sportsbook brand.”
Pazner said William Hill’s market share in the U.K. has been on the rise even after the sale to Caesars. He credits “good marketing, good product and good customer satisfaction”.
In the end, bidders included Betfred, private equity group Apollo Global Management and German betting giant Tipico, owned by CVC Capital Partners. The number of suitors bid the price upwards, Jones said.
“888 has demonstrated how it will be able to create value for shareholders by extracting cost synergies and achieving higher revenue growth and margin from enhanced market shares in key markets,” he said.
The combined company would have generated EBITDA of $464 million and revenue of $2.5 billion last year. James Wheatcroft of Jefferies said cost savings could result in 888 growing earnings per share as high as 80 percent.
888 secured £2.1 billion in debt financing from banks to fund the deal.
The company also expands from an online-only business to one with retail shops. Pazner denied speculation the company might sell off the retail sports holdings.
“Our plans are absolutely to keep the shops. The shops are run well, they are profitable, they went through a big transformation in the last couple of years,” Pazner told Reuters.
Betfred founder and CEO Fred Done has expressed interest in William Hill’s 1,400 betting shops, according to SBC News. BoyleSports may also seek out the purchase.
Company chief strategy officer Vaughan Lewis indicated 888 could emphasize some of its brands more than others.
“We’re going to see which brands deliver the greatest returns in each market and keep other brands as more of what we’d call tactical brands.”
