Agreement has been reached between the respective boards of Caesars Entertainment Inc and William Hill PLC on the terms of a recommended cash acquisition, pursuant to which Caesars will acquire the entire issued and to be issued share capital of William Hill for circa $3.7bn.
In a statement from Caesars, the firm described the move as an “historic acquisition”, one that would unite one of the largest gaming entertainment companies in the US and one of the world’s leading betting and gambling companies.
Together with igaming, which is currently outside the scope of the joint venture, Caesars expects that the enlarged sports and online gaming business in the US could generate between $600m to $700m in net revenue in FY2021 (on a pro-forma basis).
Under the terms of the acquisition, which values the entire issued and to be issued share capital of William Hill at approximately $3.7bn, William Hill shareholders will receive 272 pence per share. That represents a premium of circa 57.6% on the closing price per William Hill Share of 172.55 pence on September 1 2020.
The acquisition remains subject to antitrust and regulatory approvals as well as the approval of William Hill shareholders and closure is expected in the second half of 2021.
Caesars Entertainment CEO Tom Reeg said in the statement: “The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect. William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing US sports betting and online market.
“We look forward to working with William Hill to support future growth in the U.S. by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment.”
William Hill Chairman Roger Devlin commented: “The William Hill Board believes this is the best option for William Hill at an attractive price for shareholders. It recognizes the significant progress the William Hill Group has made over the last 18 months, as well as the risk and significant investment required to maximize the US opportunity given intense competition in the US and the potential for regulatory disruption in the UK and Europe.”
He added: “For now, it is very much business as usual. Employees will be kept fully informed through this process. In terms of our UK and International businesses, we believe they have a strong future ahead and we will work with Caesars to find suitable partners to further the long-term growth prospects of these businesses.”
Underlining the strategic rationale behind the acquisition, Caesars said it believes that the sports betting and online gaming sector represents one of the largest areas of growth in the US gaming industry, citing an estimated total addressable market size ranging up to $30-35bn.
Caesars and William Hill currently operate a US joint venture with 20% and 80% equity ownership respectively. Through this joint venture, the bookmaker runs online sports betting operations through Caesars’ market access in each state and retail sports betting operations in Caesars’ properties as well as those of other casino operators around the US.
The firm added that the current joint venture structure between Caesars and William Hill in the US needs to be broadened in scope in order to fully maximize the opportunity in the sports betting and gaming sector and provide the best possible customer experience.
The combined company, it advised, would be able to utilize the expertise and assets contained in both firms to better serve customers in the highly competitive online gaming and sports betting space throughout the US. The combined company’s market access across the US would be increased and would benefit from a broad network of sports books locations.
Other benefits would include a more unified customer experience by consolidating applications and wallets, and by allowing a more focused branding experience. William Hill’s sports betting expertise, as well as its established technology program and roadmap (including its scalable and secure Liberty Technology platform) will also play a part in that process.
The combined company will also be afforded the ability to access Caesars’ extensive and pre-existing relationships with dozens of sports teams and events including being the Exclusive Casino Sponsor of the NFL.
The casino operator went on to note the importance of aligning with media companies to enhance customer acquisition and generate excitement and loyalty across multiple products. “Currently, Caesars has a multi-year relationship with ESPN, and William Hill has a relationship with CBS Sports,” it said.
Finally, as part of the combined company William Hill would be afforded new and complete access to Caesars’ brand and loyalty program, which it currently does not have.
The big question remains as to what plans Caesars has in store for William Hill’s UK and other non-US interests. The firm underlined that its strategic focus remains on the opportunities immediately evident in the US market at this stage but said it believes in the “compelling proposition” that the bookmaker’s UK and other non-US markets offer to customers in those markets. “Those businesses have a strong future,” it noted.
Caesars concluded: “In order to best maximize those propositions and support those businesses’ long-term ambitions following completion of the acquisition, Caesars’ intention is to seek suitable partners or owners who have aligned objectives and approaches, and who will be focused on the longer-term ambitions of those businesses and for the benefit of its customers.”