Despite giving up some of the gains since, the 888 Holdings’ share price leapt by almost 17% on Wednesday after it was announced a deal has been agreed that will see the online gambling company pay £250 million less for William Hill. A £2.2 billion deal was agreed with current owners Caesars Entertainment last September but that has now been reduced to between £1.95 billion and £2.05 billion.
The £250 million discount has been agreed on the sum due on the completion of the deal, which will now come in at £584.9 million. Around £100 million of that total will also be deferred until 2024 with the final payment to be adjusted based on earnings achieved by the newly enlarged company.
888 will also no longer go ahead with a plan to raise around £500 million in fresh capital through the sale of new equity. Instead, £163 million will be raised through the placing of 70.8 million new shares, around 19% of total share capital, at 230p each.
The arrangement comes as a relief for 888 Holdings’ investors who had watched the company’s valuation half since the deal was originally announced. The weaker position of 888 had raised questions over the viability of the larger capital raise and even if the company would be in a position to complete the deal.
The change in terms was said by 888 to reflect
“the change in the macroeconomic and regulatory environment since the announcement of the acquisition, as well as compliance factors impacting the William Hill business”.
William Hill, it turns out, is still undergoing a licence review by the Gambling Commission over issues around social responsibility and money-laundering obligations. The brand, which has physical betting shops in the UK as well as an online business, has set aside £15 million to cover potential fines and Caesars has agreed to indemnify losses and costs that might result from the review up to a ceiling of £150 million.
William Hill also provided the Gambling Commission with inaccurate data when it launched an analysis of the effect of the Covid-19 pandemic on gambling behaviour. 888, which was itself fined £9.4 million in 2020 for failings on the same social responsibility and money laundering obligations, is reviewing the possible regulatory consequences of the inaccurate data submission.
The U.S. casino giant Caesars Entertainment only acquired William Hill a little over a year ago in a deal that cost it £2.9 billion. However, its intention was always to retain the company’s U.S. operations and sell off the rest of the business.
888 is still confident the deal will be a good one and estimates the enlarged company will already lead to around £5 million in cost synergies this year. They are expected to reach £100 million in 2025. 888 was founded in 1997 by two Israeli families and floated in London in 2005. One of the original founder families, the Shakeds, remain the company’s largest shareholders with a 23.2% stake.
The 888 Holdings share price is up around 8% for the week heading towards midday on Friday.
