Caesars Lowballs William Hill For Acquisition Of Company

• Caesars is one of two companies that have put in a bid to buy out William Hill’s U.S. sports betting and internet operations.
• The casino company estimates revenue ranging between $600-$700 million yearly from online sportsbooks if the deal goes through.

LAS VEGAS – Caesars Entertainment, Inc. put in a bid of $3.7 billion to buy out William Hill’s U.S. sportsbook and internet operations the U.K. sports betting company announced on Friday.

A similar proposal by Apollo Global Management, Inc. was also made, making two potential buyers for William Hill.

While the sports wagering business is said to be worth $4 billion, their potential to earn high-profit dividends makes the two offers on the table much lower in the long term than the current valuation suggests.

Caesars Holds Upper Hand Of The Two Propositions

Of the two bids on the table, Caesars has more of a chance to make a deal with William Hill as they already have a 20% stake in the company through the U.S. sports betting industry.

William Hill has been able to open sportsbooks within Caesars casinos from a previous partnership. If they chose to go with Apollo, they could lose their place at all Caesars locations because the casino corporation would be within their rights to back out of the contract as it’s with William Hill and not Apollo, making any previous obligations void.

The board for William Hill was considering presenting a deal of $3.51 a share by Caesars to the company because of the lack of potential buyers.

On Friday, the market share value for William Hill spiked to $4.03 once news of a buyout was made public. However, investors in the stock pulled back by Monday because the future of William Hill was still up in the air in terms of who would acquire the business and as a result, share prices dropped to $3.52 each.

“The U.S. is the key attraction with William Hill and a value of about $3.87 per share is easily reached at present,” said Gavin Kelleher, an analyst at Goodbody Stockbrokers.

U.K. rules allow Apollo and Caesars ample time to make final bids on the company before they no longer have the opportunity for a buyout.

Each buyer has until October 23 to put in solid offers before they have to bow out. Considering they are the only two interested parties at this point, it would be safe to assume that one or both will make a firm proposition to takeover William Hill US sports betting operations and online activities by the deadline.

What Lies Ahead

Caesars has already put out an estimate of profits that would be made in 2021 should a deal with William Hill be reached.

They expect to reach a net revenue in sports betting in the United States that will land between $600 and $700 million for a 12-month period. In order to acquire William Hill, Caesars raised their equity and also took a $2 billion hit in debt that was secured over William Hill’s operations outside of the country.

With some of their land-based locations in place at Caesars casinos and a competitive offer made next to that of Apollo, William Hill will likely be bought out by Caesars in a future deal given the two choices and all that’s at stake.

News tags: Apollo Global Management | Caesars | Caesars Entertainment | Gavin Kelleher | Goodbody Stockbrokers | Inc. | William Hill