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William Hill USA on the Verge of Sale?

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William Hill USA on the Verge of Sale?
William Hill - Photo by Bryan Steffy/Getty Images/AFP

UK-based sports betting operator William Hill may be on the verge of exiting the US legal betting scene, thanks to news of two separate offers the bookmaker received from US casino giant Caesars Entertainment and New York investment firm Apollo Management International. While the news caught some off guard, William Hill has apparently been in discussions for such a sale since the end of August.

Apollo was the first to the table with an apparent offer on August 27 and it was some time after that William Hill received a more in-depth offer from the Company as well as one from Caesars. While nothing appears imminent, the fact that William Hill has acknowledged talks for a takeover is certainly newsworthy.

“Discussions between William Hill and the respective parties are ongoing,” according to a statement issued by William Hill. “There can be no certainty that any offer for William Hill will be made, nor as to the terms on which any offer might be made.”

A Few More Details

There had been some speculation with regards to William Hill’s intentions in the US market leading up to the proposal announcement on Friday. While the British bookmaker acknowledged “separate cash proposals” from Apollo International Management and Caesars, no financial terms were made public.

Roth Capital analyst David Bain says a 50/50 partnership deal is in the works between William Hill and Caesars that would combine Caesars’ iGaming and sports betting segments with William Hill USA to make 1 mega-company going forward. Apollo looks as though it is leaning toward a more clean takeover of the sports betting brand.

Why Caesars Makes Sense

William Hill and Caesars already have a relationship – a deal would be more of a combining of the two sportsbook platforms rather than a straight takeover. Caesars have been attempting to separate its online gaming and sports betting segments for over a year and a merger with William Hill makes that goal a little more seamless.

William Hill already runs Caesars’ sportsbooks in the US and Caesars has a 20% stake in the British bookmaker’s state-side business. As the third-largest book in the exploding US legal sports betting market, there is a sentiment that the Caesars name could boost the profile of the Company – something William Hill, all by itself has struggled to do thus far.

Why Apollo Makes Sense

Apollo has had its eye on the gambling space for quite some time and William Hill seems to fit a plan that has long been in the making. In 2008, Apollo was part of a group that bought Harrah’s, which later became Caesars for more than $30 billion – they already have experience in the space.

The investment went sour quickly, forcing the company to declare bankruptcy in 2015 after insurmountable debt crippled the company. So, the interest has always been there and William Hill represents a successful, established brand in which Apollo could reenter the industry they had hoped to flourish in a decade ago.

It Takes Two to Tango

With Caesars and Apollo both vying for William Hill’s US operations, it has created a bidding war which is great news for stakeholders in the British firm. On Friday, William Hill shares jumped 32% on the London Stock Exchange, taking the company’s worth to over $4 billion.

The two interested parties have been given a date of October 23rd as the cutoff for a firm proposal for William Hill. In the meantime, the sports betting industry in the US looks as though it will continue its upward trajectory after months of COVID-related slowdowns.

While Apollo wouldn’t immediately add a ton of value to the Company, there is a feeling that it would at least provide a spark for the brand. Caesars, on the other hand, could provide an immediate boost. Roth Capital analyst David Bain estimates that a William Hill/Caesars deal would balloon the Company’s worth to $13 billion almost immediately.

A lot is at stake for all parties involved in the potential sale. Although not quite a seismic shift in the US legal sports betting landscape, William Hill’s possible departure from the US scene will have an effect nonetheless. Stay tuned.