Caesars Entertainment’s William Hill Acquisition: strategic move for the US market?

Caesars Entertainment’s offer for the William Hill acquisition, which began months ago, would see the company pay $376.15 for a single share which, according to Chairman Roger Devlin: “The William Hill board believes this is the best option for William Hill at an attractive price for shareholders”, as well as: “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”.

However, the offer needs antitrust and gaming regulatory approvals which Caesars is certain to secure.

Caesars will use existing cash, $2.0Bn of new non-recourse debt facilities, which it intends to secure against William Hill’s non-US businesses, such as on the Italian gambling market, as well as the proceeds of an equity capital raise.

Is Caesars the only bidder?

William Hill recently explained that after an initial proposal by Apollo Global Management received on August 27th, the online betting and gambling sportsbook then received another offer from Apollo, while Caesars made its own offer.

However, Caesars’ has a 20 percent stake in a joint venture struck by Eldorado Resorts with William Hill, which holds 80 percent, and has already stated that any William Hill acquisition agreement with Apollo Global Management would terminate William Hill’s rights to manage online sports betting operations through Caesars’ marketplace, retail sports betting at both Caesars’ and other casino properties in the United States.

New opportunities with the William Hill acquisition

Should Caesars be successful with the William Hill acquisition, it said it will go after improving the customer experience and maximizing the opportunity in the gaming and sports betting industry now that the US markets are opening up for the online gambling world.

Caesars also claims that a combined business with William Hill would help improve services for the U.S. customer base, increase its in-country market presence as well as provide a unified customer experience by consolidating portfolios and applications. The deal would give Caesars a great portfolio of assets and access to existing relationships with events and teams, including being the exclusive casino partner of the National Football League.

Should the William Hill acquisition prove successful, the company will also gain access to Caesars’ loyalty program, which would benefit loyal customers from both companies.

As Caesars’ Chief Executive Tom Reeg stated, the sports betting expertise of William Hill will complement Caesars’ offering, enabling the combined group to better serve their clients in the growing US sports betting and online market.

Mr. Reeg also added that they look forward to working with William Hill, and that they aim to support future growth in the US by providing customers with a comprehensive experience across all areas of gaming, sports betting and entertainment.

Reasons why the William Hill acquisition is taking so long

The reason behind the acquisition taking this long is that GMV and then HBK (at March 31 UK Scheme Court hearing) argued against the deal, and through a letter to the William Hill shareholders they stated their opposition is based upon their belief that shareholders voting on the Scheme did it without all the necessary information that would have allowed them to weigh up the whole agreement.

They also said that it is their idea that the terms of the joint venture agreement entered into between William Hill and El Dorado (now Caesars) dated 6 September 2018 were not fully disclosed by William Hill.

What are GMV’s and HBK’s claims?

HBK and GMV are claiming a lack of transparency related to the list of potential buyers for the William Hill acquisition that the US-based company could consider “restricted”. At the EGM/Court meeting, after being questioned by HBK, William Hill has revealed that there can be a maximum of six names on the list, and Caesars can replace one name every six months.

HBK mentioned that Caesars is moving to include private equity firm Apollo Global Management in this list. The Harrah’s operator has publicly warned William Hill against accepting Apollo’s offer, saying it could effectively end the U.S. deal with Caesars.

When should the agreement be finalized?

Caesars had previously hoped to complete the William Hill acquisition during the second quarter of 2021, and an update published on the 10th of March suggests this timetable should be correct.

William Hill added that Caesars expected to receive all the remaining approvals from the relevant US authorities and other gambling regulators before the end of March of 2021. They also had scheduled a Scheme Court Hearing on the 30th of March, at which the court will be asked to sanction the acquisition. The idea was that if Caesars Entertainment Inc. and William Hill satisfied all the conditions, and the court approved the deal, the acquisition was expected to be completed on the 1st of April with William Hill’s shares cancelled on the 6th of April 2021.