- »Caesars Entertainment Begins Takeover of William Hill
Caesars Entertainment Begins Takeover of William Hill
The executives at Caesars Entertainment have been quite busy in the past couple of years, leading to the whirlwind that has been 2020 so far.
Just a few months after the completion of the merger between Eldorado Resorts and Caesars Entertainment, the latter recently confirmed the rumors that it wanted to buy William Hill. Evidently, the talks were so advanced that William Hill did accept the offer in short order.
Those executives are handling the paperwork for the US$3.7 billion deal.
Ink Barely Dry on Eldorado-Caesars Deal
The rumors began in the first months of 2019. Reuters reported it in March of 2019. Caesars Entertainment and Eldorado Resorts were in talks regarding a merger. This was after other companies like MGM Resorts expressed interest in Caesars.
Finally, however, in June 2019, the companies confirmed that they agreed to a $17.3 billion deal.
From that point forward, Caesars and Eldorado presented their deal to regulators that needed to approve it. Meanwhile, the companies needed to shed some excess weight. Both sold properties and adjusted their holdings.
It took nearly a year to sort it out, but when they did, they announced its finalization. Eldorado became Caesars Entertainment, owner of dozens of casino properties in North America. The Caesars website proclaimed, “Welcome to the Empire.”
The new “empire” began as a merged company in July 2020, little more than three months ago and amidst a pandemic. Caesars then had 80,000 employees to handle, many of whom had been laid off for months due to casino closures in the age of coronavirus.
Rumors of a William Hill Deal
The buzz began in late August and early September. Caesars Entertainment and William Hill were talking about a partnership.
The two already worked together in several respects. Just after the merger with Eldorado, William Hill took over the management of sportsbooks associated with Caesars properties and the Caesars brand in the US market. The two had been in talks about it since 2018, and Caesars agreed to take 20% of the US sportsbetting revenue and a share of sportsbooks’ profits.
Talks of a merger of some sort made sense in that respect, but many speculated about the type of partnerships possible. William Hill was known for its land-based betting shops in the UK, Caesars was known for its land-based casinos in the US, and William Hill had a bit more experience in the online space. However, Caesars had been working through the new US regulated market quite efficiently.
Bigger than Expectations
Rumors didn’t fester for long. News emerged during the last week of September that Caesars made an offer to acquire William Hill in its entirety. And two days later, William Hill announced that it accepted the $3.7 billion (or £2.9 billion) offer.
They then revealed that Caesars made its initial offer in late August. After some talks between the two, Caesars submitted an updated proposal in September. William Hill liked what it saw.
William Hill explained some of the math behind the deal. First, it acknowledged that Caesars owned and operated 54 domestic properties in 16 American states, all operating under Caesars, Harrah’s, Horseshoe, or Eldorado brand names. Its entry into the online gaming and sports betting market in the US had incredible potential with a market size estimated at up to $30-35 billion.
The aforementioned joint sports betting venture already led to a harmonious relationship. A broader deal between the entities would “fully maximise the opportunity in the sports betting and gaming sector and provide the best possible customer experience.”
Further, William Hill noted the following benefits of a combined company:
- Combined assets and expertise will better serve US customers.
- More focused branding and application/wallet experience.
- Caesars to benefit from William Hill’s sports betting expertise and established technology.
- William Hill to benefit from Caesars’ relationships with major sports leagues and partnership with NFL, as well as media relationships with ESPN and CBS.
- Hill will benefit from Caesars’ loyalty program of 60 million members.
William Hill estimated that the venture could generate net revenue in the US market of $600-700 million in 2021 alone.
Details and Dollars
According to the companies’ release of information upon confirmation of the deal, Caesars will partially fund the purchase by issuing $1.7 billion in new stock. The 31 million shares cost $56.00 per share. There was also a 30-day option to purchase up to 4,650,000 more shares of the common stock.
Deutsche Bank Securities and J.P. Morgan worked together as lead book-running managers, with numerous others acting as co-managers.
William Hill shareholders will receive 272 pence per share in cash.
Caesars CEO Tom Reeg noted, “The opportunity to combine our land-based casinos, sports betting and online gaming in the US is a truly exciting prospect. … We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting and entertainment.”
The companies expect to close the deal in the second half of 2021, approximately one year from this announcement.
William Hill’s stock on the London Stock Exchange jumped at the news. The offer pushed stock from $221.40 to $297.00, though it since settled to $275.10. Caesars’ stock has been on a serious roller coaster in the past month, hitting a high of $59.22 on the acceptance of the deal but dropping as low as $52.41 in the days that followed.