| Online casino business signals intention to keep bookmakers shops as part of a foray
into bricks and mortar
The online casino company 888 Holdings has confirmed its £2.2bn purchase of William Hill
International and signalled its intent to keep the bookmakers 1,400 shops as part of a foray into bricks-and-mortar betting.
William Hill has
been owned by the Las Vegas casino company Caesars since last year, when shareholders accepted a $3.7bn (£2.7bn) takeover bid, but the American firm was
open about its lack of interest in the British companys 87-year-old brand, its high-street bookmaking shops and its non-US online operations.
Caesars was instead keen on acquiring William Hills expertise, gleaned in the UKs competitive £2.3bn-a-year online sports betting
industry, to underpin an assault on the fast-growing US market after the supreme court overturned a long-held ban on sports betting in 2018.
of interest in anything except that lucrative expansion drive prompted a bidding war for the unwanted non-US assets, involving Apollo Capital Management and
CVC Capital Partners, as well as 888.
On Thursday, 888 confirmed it had won the race to acquire the remainder of William Hill and said it expected to
complete the deal in early 2022, subject to approval from shareholders.
Investors holding 47% of 888s shares had already approved the deal,
either with expression of support or irrevocable undertakings, it said.
888 Holdings, founded by Israeli tech entrepreneurs, specialises in online
casino gaming but said it had no intention of selling William Hills traditional high street sports betting operation and had already rebuffed overtures.
Itai Pazner, the 888 chief executive, said: We did see interest in the retail [estate] from the outside but we feel that the retail is an
integral part of the William Hill asset.
William Hill has already trimmed its shop network from 2,333 in 2018 to about 1,400 today, a process
accelerated by the effect of Covid on the high street and the revenue-crimping effect of the cut in fixed-odds betting terminal (FOBT) stakes from £100
to £2, which took effect in 2019.
Today theyre managing a very well-run retail estate thats present in good and prime
locations, Pazner said.
Were planning to keep the retail stores and the great people they have in them.
Hills high street rival Betfred was thought to be interested in acquiring the bricks-and-mortar shops in a deal that would have nearly doubled the size
of its UK network.
Pazner said 888 was determined to go ahead with the transaction, despite uncertainty over the outcome of a landmark government
review of gambling legislation expected to result in a crackdown.
He said the deal made even more sense in the light of regulatory
uncertainty, because a larger company would be better able to cope with change.
Online casino products are widely expected to be a target for reform,
with ministers considering measures such as a £2 stake limit on virtual slot machines, in line with FOBTs.
Pazner said adding William Hills
more heavily sport-focused business would offset that risk but said this was not part of the logic of the deal.
888 has been keen for a combination
with William Hill since at least 2016, when it teamed up with the bingo hall owner Rank in an attempt to forge a three-way merger. That deal, which failed, was
itself an attempt to turn the tables after William Hill had bid £700m for 888 in 2015.
In a statement, 888 Holdings said it expected the
transaction to result in synergy savings of £10m next year and up to £100m a year by 2025.
It has taken on £2.1bn of debt to fund the
transaction and said it would issue up to £500m of new equity to reduce the leverage built up on the deal.
Russ Mould, the investment director at
AJ Bell, said the takeover catapults 888 into the big leagues, theoretically taking its sales from $814m to $2.5bn and its underlying earnings from
$156m to $464m.
He also highlighted the complete reshaping of the UK gambling landscape over the past few decades.
In the 1970s and
1980s, the British betting scene was dominated by the so-called big four bookmakers: Ladbrokes, William Hill, Corals and Mecca. Not one of those
names is now independent, he said.
Instead, the new leaders are [Paddy Power and SkyBet owner] Flutter Entertainment, Entain [owner of
Ladbrokes-Coral], Bet365 and now 888 [owner William Hill, which merged with Mecca in the 1980s].
Bet365 has no high street presence at all and
the other three are all here more because of their online prowess than their physical store estate.
Moreover, all four have ambitions to further
their global presence for good measure.