888 lands £163m William Hill funding boost as share issue completes

888 has completed a £162.9m share rights issue placement on the London Stock Exchange (LSE) as it looks to secure funds to complete its William Hill International acquisition.

In an accelerated share placement on the LSE taking place in just one day, the London-listed operator issued 70.8 million new ordinary shares, a bookbuild carried out by investment banks JP Morgan and Morgan Stanley.

The shares were issued at a price 230p per share, representing a premium of 19.8% on 888’s closing share price of 192p on 6 April.

888 has said the net proceeds of the placement will be used to partly fund the £2.2bn acquisition of the William Hill’s non-US business from Caesars Entertainment.

“The company consulted with a number of its major institutional shareholders prior to the placing and has respected the principles of pre-emption through the allocation process insofar as possible,” 888 said in a statement. “The group is pleased by the strong support it has received from new and existing shareholders.

888’s share price jumped dramatically following details of the share placement and the news it had renegotiated its acquisition of William Hill to save £250m.

Shares began trading on 7 April at 192p but rose to 224p at the close.

In a 166-page statement released yesterday, 888 confirmed a reduction in the cash consideration element of the William Hill deal from a price of £834.9m to £584.9m, a fall of almost 30%.

The document claimed the lower price “reflects the change in the macroeconomic and regulatory environment since the announcement of the acquisition”.

Based on the reduction, the enterprise value of the William Hill now stands at between £1.95bn and £2.05bn, a reduction of up to £250m.

Later in the statement, 888 also confirmed the signing of certain indemnity agreements covering William Hill International businesses inked with selling entity Caesars Entertainment.

The agreements have been negotiated out of a need to mitigate the potential regulatory consequences of an ongoing review into the William Hill licence by the UK Gambling Commission (UKGC).

Inked on 8 March, they cover Mr Green Limited, WHG (International) Limited and William Hill organisation limited, with a total aggregate liability to Caesars of £380m.

Any licence suspension applied by the UKGC to any of these entities will be indemnified by Caesars to a maximum of £152m.

In the event of licence conditions being imposed by the UKGC, Caesars will be liable to pay a maximum of £78m to 888 as part of its indemnity agreement.

Following the lifting of any licence suspension, Caesars must make an additional one-time reactivation payment not exceeding £150m to each of the licensed entities