- Bookmaking giant William Hill was purchased earlier this year by Caesars Entertainment for £2.9bn, or just under $4 billion USD.
- Caesars immediately set into the motion the sale of William Hill’s non-US assets.
- Analysts suggest that the sale of William Hill’s non-US assets could attract a purchase price of up to £1.5bn or just over $2.1 billion USD.
Since the completion of Caesars Entertainment (NASDAQ: CZR) purchase of UK bookmaking giant William Hill the company has made no secret of the fact that they did the deal to acquire the company’s US bookmaking assets. The divestiture of William Hill’s non-US assets has been the plan all along, something that Caesars reiterated in the press release announcing completion of the transaction. In fact, the wheels are already in motion to put the non US-assets up for sale and the expectation is that they will attract significant bidding interest.
In play are William Hill’s UK and European online businesses along with 1,400 branded high street bookmaking shops, primarily in England. The US sports betting market is growing rapidly though the same can’t be said for Europe. In particular, the retail bookmaking market in the UK is very stagnant. Even so, there are already several companies expected to make a play for William Hill’s non-US assets and a potential bidding war could mean a sale price as high as £1.5bn or just over $2.1 billion USD.
Ironically, the future of the William Hill brand in the US is set for now but the question has become its future viability elsewhere in the world. Caesars Entertainment is planning to continue sportsbook management services for third party operators which is where William Hill established themselves as the dominant player in the Nevada sports betting market. The current setup is that Caesars will operate their own branded sportsbooks while using the William Hill name for third party operations. There is some question over the longterm future of this arrangement–does Caesars see a lucrative revenue stream here or is it a case where it would be too complex and costly to get out of pre existing management contracts? In the CZR Q3 earnings call back in November CEO Tom Reeg made clear that the William Hill name would live on in the US:
You should expect that we will use the Caesars brand for Caesars operated, owned and operated properties. And for third-party properties, you should expect that the William Hill brand will live on in the US.
The future of the name outside of the US is now anyone’s guess. The sale of the non-US assets is expected to draw interest primarily from two quarters: Buyout funds in the US and Europe along with several European gaming companies. There is also the possibility of a piecemeal sale with, say, the UK retail shops and European online assets purchased by different buyers. Caesars’ preference is to sell the assets in one package but in a situation like this everything is negotiable.
LOOKING AT THE POSSIBLE BIDDERS FOR WILLIAM HILL’S NON-US ASSETS
We’ll start with the buyout funds–most observers (myself included) think that Wall Street private equity firm Apollo Global Management has the inside track. Apollo lodged a rival bid for William Hill during the process of Caesars purchase and has made clear that they’re interested in the non-US operations. Apollo already owns Italian gaming operator Gamenet which purchased IGT’s Italian gaming machine, sports betting and digital businesses in late 2020. The most likely scenario under Apollo’s ownership would be to combine William Hill with Gamenet and cut costs. Other buyout funds reported to be mulling over a deal is Luxembourg based CVC Capital Partners and London based private equity firm Apax Partners.
There’s a host of gaming companies that have some degree of interest. The most recent gaming company to express interest is Entain Plc. Entain is best known to US gaming interests as MGM Resorts’ partner in the BetMGM sports betting and igaming platform. In Europe, they’re best known as owners of iconic British bookmaking brands Ladbrokes and Coral. Through these two marquees they already control 40% of the UK retail bookmaking market and the acquisition of William Hill’s 1,400 shops would further improve their position–to the point that they would likely draw scrutiny from England’s Competition and Markets Authority (CMA). Entain CEO Jette Nygaard-Anderson confirmed to Bloomberg that her company was at least exploring the opportunity:
“We’re looking at everything, so we’re certainly also looking at whether this could be an interesting opportunity.”
Another name that has shown interest in William Hill’s European businesses is that of Fred Done, the billionaire co-founder of Betfred. Betfred has established a solid foothold in the US market and was William Hill’s second largest shareholder at the time of the Caesars purchase. He reportedly held informal talks with William Hill management about a potential bid in late 2019. Done could find himself in a similar situation with the CMA due to the 1,600 Betfred retail outlets in the UK. Combined with William Hill’s 1,400 stores it would represent somewhere around 45% of UK retail betting.
No secret that FTSE 250 listed 888 Holdings will be looking at a move for William Hill’s non-US assets. Company head Itai Panzer confirmed their continued interest in an analyst call in late April though was otherwise tight lipped:
“We have mentioned William Hill in the past, that could be something that we would be looking at. And I won’t change my comment on that.”
888 has started to diversify into sports betting after building their brand primarily in casino and poker. They’re planning to launch in the US sports betting market within the year. Stockholm based Kindred, owner of Betsson is also planning a Colorado launch in 2021 and they’ve been mentioned as a long shot suitor for William Hill’s European assets.
Separately, Caesars is also looking to sell their UK retail casino operations which include Empire Casino, Manchester235 and a Playboy branded property in London. They thought they had found a buyer in Canadian gaming operator Sonco Gaming but that deal has reportedly fallen apart without comment from either party.