"Historic Acquisition": Caesars Agrees to $3.7 Billion Takeover of William Hill

Well, that didn't take long. Just days after rumors started swirling about the potential sale of William Hill, Caesars Entertainment Inc. emerged out of what looked like a bidding war with Apollo to purchase the British bookmaker for about $3.7 billion. Caesars looks as though it will chase William Hill's successful business operations in the US and will “seek suitable partners or owners” for their other business, notably William Hill's UK entities.

The deal, if consummated will make Caesars one of the biggest gaming entertainment companies in the US and would put Caesars in the conversation as one of the world's largest betting and gambling companies.

Caesars Entertainment Inc.’s bid was accepted by the William Hill board on Wednesday and paves the way for Caesars' expansion in the bustling US legal sports betting scene. While a strong bid from Apollo Global Management Inc. was said to be considered, the Caesars deal seemed to be the most logical fit based on the relationship that Caesars and William Hill had prior to news of a possible sale.

About That Relationship

William Hill and Caesars operate a joint venture in the US legal betting industry with William Hill currently running online sports betting at Caesars properties in jurisdictions that allow for legal internet sports betting.

Caesars had owned 20% of William Hill's US operations prior to the outright purchase of the whole company and made sense from a merger point of view. It is simply an expansion of an existing relationship rather than a ground-zero takeover. It is said that combining the two sports betting and online businesses could generate $600-$700 million by next year.

Caesars Entertainment CEO Tom Reeg said in the statement: “The opportunity to combine our land-based casinos, sports betting and online gaming in the US is a truly exciting prospect. William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing US sports betting and online market.

About William Hill's Overseas

As previously mentioned, Caesars doesn't appear interested in running William Hill's multitude of overseas businesses which includes about 1,400 betting shops alone. They look interested in just what William Hill has built up in their nearly two years of operating in the US.

That said, there should be plenty of suitors for William Hill's assets in Europe. They were responsible for an estimated 93% of the Company's revenues or about $575 million in 2019. Some analysts believe that William Hill’s non-US assets could be worth between $2 billion and $4.5 billion

As for the overseas William Hill entities, a statement from Caesars noted; “Caesars’ intention is to seek suitable partners or owners… who will be focused on the longer-term ambitions of those businesses and for the benefit of its customers”. Betfred has been a name mentioned as an interested party in William Hills overseas operations.

What Caesars Gets Out of the Deal

Caesars was looking to broaden its base and maximize their iconic branding in order to take them into the elite category of sports betting providers. The deal includes already-existing sponsorship deals with individual pro sports teams and leagues themselves as well as all of the customer acquisition that William Hill has been on the forefront of for 18 months.

A press release cited the fact that, “Currently, Caesars has a multi-year relationship with ESPN, and William Hill has a relationship with CBS Sports” as part of the motivation for the acquisition.

According to Caesars, there were a few strategic reasons for their bid for William Hill. The first was to create a "Unified wallet and customer experience across sportsbook and online casino." The second being a "Chance for William Hill to cross-sell to 60 million customers in Caesars’ rewards database." The third being "Broader market access." and the fourth being "Improved attractiveness as a potential partner for media companies."

Caesars clearly has bigger aspirations for their brand in the growing US legal sports betting space and William Hill was not only a logical addition to their portfolio but a wise one as well.

Of Course…

The acquisition still has some hurdles to clear, including regulatory and antitrust approvals that are necessary in such a large-scale deal.

It will likely take until the second half of 2021 before the Caesars purchase is fully consummated and Caesars can start reaping the full rewards of their purchase. Caesars has identified the sports betting sector as a huge opportunity and took quick and decisive action on a plan to expand in that space.