Is Will Hill Seeking Renewed M&A Courtship with Caesars?

Caesars Entertainment fails in €3bn bid to takeover UK sportsbook William Hill.

Caesars Entertainment Fails in €3bn Bid to Takeover UK Sportsbook William HillThe gambling industry, both online and on land, has been a volatile one of late. It’s incredibly lucrative, don’t get me wrong, but competition is so fierce, no one is safe. Caesars Entertainment and William Hill are among the most recognized casino and sportsbook brands in the world, yet both have experienced more than their fair share of hardship in recent years.

Caesars just emerged from bankruptcy in late 2017. Billionaire investor Carl Icahn upped his stake in the company to 17.75% earlier this year, giving him majority influence. His first and foremost recommendation has for Caesars to seek out serious M&A offers. And wouldn’t you know, William Hill’s been down on its luck – why not start there?

Caesars Attempts €3bn Takeover of UK Sportsbook William Hill

According to a recent report in The Sunday Times, negotiations between the Nevada-based casino juggernaut and British FTSE 250 sports betting giant began in May of 2018. Talks continued through the summer, but by fall, everything fell apart.

The information coming down the newswire states that Caesars was prepared to offer a cash and shares deal that would have put the company’s value at about €3 billion. The merger would have increased the two brands combined value to upwards of €6 billion.

The reports indicate negotiations began crumbling towards the end of summer when Caesars Entertainment posted significantly lower income than expected for Q2’18. At that time, Will Hill shares were going for almost 300p. Now, just nine months down the road, those same shares fell to an abysmal all-time low 134p at last week’s close.

In the meantime, Caesars has turned its attention to Eldorado Resorts, who’s been eyeing up a takeover of the Vegas casino giant. More on that in a moment (wait for it…)

Is Will Hill Floating Itself in an Intentional Leak?

Private negotiations are traditionally meant to stay just that – private. If either company wanted the media to know that an M&A was on the table, it would have been plastered all over the headlines. But it wasn’t. Three months of negotiating, and not a single mention outside closed office doors. Until now…

It’s being suggested by so-called experts that William Hill intentionally leaked the news of last year’s failed takeover bid from Caesars. And why not? With share prices falling more than 50% to an all-time low, why not put yourself in the media spotlight? Besides, that piece of information might draw the attention of other companies that me be willing to bail the flagging company out.

When you’re business s doing well, merger talks can lower the confidence of investors can cause the a decline in stock prices. When you’re on the brink of disaster, the opposite can be true, piquing interest and thereby increasing share value in hopes of major, positive change. Such was the case Monday morning when Will Hill jumped up to 140p shortly after the market’s opening.

Have Analysts Figured Out William Hill’s Clever Plan?

Now, to get back to the Caesars/Eldorado situation – it’s worth noting that William Hill is working with both of these companies. The bookmaker’s US subsidiary is already responsible for the operation of sportsbooks in some of Caesars properties. In 2018, The British firm sing ed 25-year exclusivity contract with Eldorado to provide both land-based and digital sports betting services for Eldorado.

Should Eldorado make the anticipated bid for Caesars, city analysts predict William Hill wants to be a part of that package deal. Odds are, with Carl Icahn pushing hard for quality acquisitions, Caesars could snatch up the UK sportsbook for a bargain basement price in a win-win-win deal.

 

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