Extinguishing speculation of a potential bidding war with prominent private equity firm Apollo Global Management, Caesars Entertainment Inc. on Wednesday announced that it had agreed to terms on the acquisition of UK-based bookmaker William Hill for $3.7 billion, in an effort to further expand its position in the rapidly growing U.S. sports betting and online gambling markets.
“The opportunity to combine our land based-casinos, sports betting, and online gaming in the U.S. is a truly exciting prospect,” Caesars Entertainment CEO Tom Reeg said in a statement. “William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing U.S. 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.”
“The William Hill Board believes this is the best option for William Hill at an attractive price for shareholders,” said Roger Devlin, chairman of William Hill.
Backdrop for the acquisition
Caesars is going all-in with an attempt to acquire William Hill, firing a salvo in a potential bidding war with a top private equity firm.@MattRybaltowski examines the latest market news. https://t.co/NTkW5I1CtF
— Sports Handle (@sports_handle) September 29, 2020
Caesars and William Hill had previously paired on a joint venture in which William Hill gained market access through Caesars in certain states to offer its online sportsbook, and also outfit Caesars properties with William Hill-branded sportsbook lounges. This existing pact was a key driver behind William Hill’s decision to accept the Caesars offer — as taking Apollo’s bid would have imperiled that access agreement.
The $3.7 billion sum (£2.9 billion) represents a 25% premium to William Hill’s closing price of 217.60 pence on Sept. 24, the day before William Hill announced the two offers. The acquisition is subject to regulatory approvals and is expected to close in the second half of 2021.
This deal comes on the heels of DraftKings going public in April via special purpose acquisition company Diamond Eagle, and Penn National Gaming (PNG) acquiring a one-third stake in Barstool Sports, which recently rolled out its online sportsbook in Pennsylvania. PNG raised nearly $1 billion through a stock sale concluding Tuesday in an effort to place the sportsbook app in new markets.
By way of further background, Caesars Entertainment was previously known as Eldorado Resorts, which acquired Caesars Entertainment Corporation in 2019; Eldorado subsequently changed its own name to Caesars Entertainment in July upon completion of the deal. Caesars doesn’t have only sports betting on the mind — it’s more broadly targeting online gambling/online casinos, which garners fewer headlines than sports betting but is a much more consistent revenue generator in states where it is permitted, such as in New Jersey. The combined company owns and operates more than 55 casino properties worldwide, and in 16 states, including in not-yet-tapped online wagering markets such as Ohio and California.
Put simply, there is still an enormous amount of growth ahead in the U.S. on both the legal sports betting and online casino/gambling fronts, which Caesars is seeking to get a jump on with combined assets, databases, and technology.
One element of those synergies is already manifested through Caesars’ deal with ESPN. The Worldwide Leader in Sports displays William Hill’s sports betting lines across its platforms and also puts William Hill alongside DraftKings as a “co-exclusive” link-out provider. (Basically a co-main event.) William Hill also has a separate media deal with CBS Sports.
“[This deal] 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 U.S. opportunity given intense competition in the U.S. and the potential for regulatory disruption in the UK and Europe,” Devlin said.
According to Reuters, Caesars will partly fund the deal with a $1.7 billion issue of new stock.