888 lands William Hill’s Non-U.S. units in $3B Deal

888 Holdings has reached an agreement to buy William Hill’s European business from casino giant Caesars Entertainment.

The landmark deal will include William Hill’s 1,400 UK betting shops which will see the online-only 888 move into the retail channel for the first time. Although many U.K. companies have closed their physical stores after government crackdowns made them less profitable, 888 plans to keep them operational.

Chief Executive Officer Itai Pazner said in an interview.

“It’s a stable business, positive cash flow, profitable — very profitable — so I see no reason not to keep it, and keep investing in it,” he said by phone, referring to the brick-and-mortar stores. “It’s obviously not a significant growth business, but it is a very stable business.”

888 has been a relatively small player in a U.K. betting market dominated by the likes of Flutter Entertainment Plc and Entain Plc. The deal will allow 888 to use the William Hill brand everywhere apart from the U.S, combining a group of more than 12,000 employees with an estimated savings of around ￡100m a year, along with the potential to increase revenue with enhanced customer proposition and product offerings.
The operator said the acquisition would give it “significantly enhanced exposure to sports betting, the world’s largest and fastest-growing online segment, with the addition of an iconic sports brand”.

“The acquisition of William Hill International is a transformational and hugely exciting moment in 888’s history,” 888 chief executive Itai Pazner said. “This transaction will create one of the world’s leading online betting and gaming groups with superior scale, exceptional brands, increased diversification, and a platform for strong growth.”

“William Hill is an iconic sports brand, making it the ideal complement to 888, one of the leading global online gaming brands. Our strategies are also complementary, being digitally-led, customer-focused, and committed to player protection and raising industry standards around safer gambling.”

Caesars Entertainment

Caesars Entertainment purchased William Hill nearly a year ago for $3.7bn as part of a wider consolidation, which saw several U.S. companies snap up London-listed groups to gain the upper hand on the fast-growing US market after the supreme court legalised sports betting in 2018. Caesar’s lack of interest in William Hill’s high-street shops or non-US online operations prompted a bidding war involving Apollo Capital Management and CVC Capital Partners along with 888.

“We have found an owner for the William Hill business outside the U.S. which shares the same objectives, approaches and longer-term ambitions of that business,” Caesars CEO Tom Reeg said.

Funding

888 successfully gained ￡2.1bn in fully committed debt financing from JP Morgan, Morgan Stanley and Mediobanca, including ￡1.6bn of term loans and ￡500m of bridge loans/senior secured notes in order to fund the deal. The online gambling firm also obtained a fully committed revolving credit facility of ￡150m and will attempt to raise ￡500m by issuing new equity via a capital raise in the near future.

What’s Next  

The Acquisition is classified as a reverse takeover under the Listing Rules of the Financial Conduct Authority (“FCA”) as such it remains subject to a host of approvals of 888’s shareholders. The betting company has already revealed that it secured the backing of its largest shareholder, its founders’ Dalia Shaked Trust, which holds a 23% stake in the operator. Additionally, 888 and Caesars must also finalise an agreement with Caesars over the restructuring of the William Hill US and non-US businesses.

Subject to satisfying all of these conditions, 888 hopes to finalise the purchase during the first half of 2022.

“We have been incredibly impressed with the William Hill management team, and I look forward to working with them and the wider William Hill team to create great products for our customers, driven by best in class technology, powerful brands, and benefitting from our significantly enhanced scale,” Pazner added.

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