Caesars Entertainment reduce William Hill sale price by $327m

Caesars Entertainment Inc has revised its agreement to sell the non-US assets of William Hill to 888 Holdings Plc.
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Caesars Entertainment Inc has revised its agreement to sell the non-US assets of William Hill to 888 Holdings Plc at an agreed valuation of between £1.95bn and £2.05bn ($2.55bn and $2.68bn).

The revised deal includes a £250m ($327m) reduction in consideration payable at closing. Caesars will be entitled to receive up to £100m ($131m) as deferred incentive subject to the enlarged business of 888 meeting certain 2023 financial targets.  

Deal-makers agreed to revise the terms of the agreement that were negotiated on September 9, 2021, in light of macroeconomic changes and regulatory/compliance factors that have come into play.  

Following debt repayment and additional working capital adjustments, Caesars expects to receive net proceeds from the transaction of approximately $785m at closing, subject to customary closing purchase price adjustments.

888 noted that the amended agreement confirms William Hill is expected to incur losses from an ongoing license review conducted by the UK Gambling Commission (UKGC).

“Following a compliance assessment conducted in July and August 2021, the William Hill Group is subject to an ongoing license review and is addressing certain action points raised by the UKGC concerning William Hill’s social responsibility and anti-money laundering obligations,” 888 disclosed in its update.

As a result, Caesars has agreed to place William Hill, Mr Green and all UK licensed entities under an Indemnity Deed to compensate 888 for negative regulatory consequences.

888 also provided a full-year 2021 statement on William Hill’s financial performance that saw the operator’s UK and Euro units hit revenues of £1.24bn ($1.62bn), alongside a 10% uplift in underlying EBITDA of £164m ($214m).

The board of 888 has adjusted its funding options to conduct the deal. The firm now expects to generate £500m ($654m) in cash proceeds by executing a new private investor bookbuild, issuing up to 70 million new shares, representing approximately 19% of the total issued share capital of the business.

“The board continues to believe the acquisition has highly compelling strategic and financial benefits, with the current macroeconomic environment and changing market conditions across its key markets only serving to strengthen the rationale for bringing together two highly complementary businesses and combining two of the industry’s leading brands,” 888 explained. 

“Alongside the strategic benefits, the combination of 888 and WHI is expected to deliver significant operating efficiencies, including pre-tax cost synergies of at least £100m.”

Later this month, 888 will publish a new deal prospectus and provide further deal information in its Q1 trading update.