Hills and GVC consider joint offer for Sportingbet
Discussions over estimated £350m deal at preliminary stage " Hills interested in regulated side of business only.
William Hill and GVC Holdings are in preliminary talks over launching a joint bid for Sportingbet which would see the operator’s business divided between the two companies.
If an estimated £350m deal is completed it would result in Hills taking over Sportingbet’s Australian business and “certain other locally licensed businesses,” with the remainder going the way of GVC, a joint statement read this afternoon.
Hills pulled out of Australia earlier this year in a move to clear the way for the operator to gain a licence and painlessly enter the Nevada egaming market, while it had reportedly been in discussions to take over Centrebet in May 2010 before the Australian operator was acquired by Sportingbet last year for a nine-figure sum.
Helped by the Centrebet acquisition, Sportingbet recorded a 93% year-on-year revenue increase from its Australian operations in last month’s trading update for the three months ended 31 July. According to a note from Jefferies, the jurisdiction accounts for some 90% of Sportingbet’s Q3 profits.
Approximately 70% of Sportingbet’s revenues come from regulated markets, with Hills potentially set to see the benefit of the strong Miapuesta brand in Spain and the local Danbook and Scandic brands in Denmark, where the London-listed operator is yet to apply for a licence and where Sportingbet was among the first wave of accredited egaming companies.
A corporate finance expert familiar with the matter estimated Sportingbet’s value to be around 50p per share, equating to an equity value in excess of £350m. However a statement from Hills explains “No formal approach has been made to the board of Sportingbet and there can be no certainty that any offer will be forthcoming and nor as to the terms on which any offer might be made.” Both companies have until 16 October to make a formal bid.
Last year saw GVC-backed East Pioneer Corporation take control of Sportingbet’s Turkish-facing Superbahis business, however the other territories which could fall under the control of the AIM-listed operator have not been specified.
It is by no means the first time that Sportingbet has been subject to takeover or merger speculation, with a proposed merger with Ladbrokes falling down last October amid reports of “legacy risk” issues. The previous year saw discussions with Unibet also prove fruitless, with a leak blamed for the collapse of talks in November of that year.
Unibet would be among Hills’ competitors in Australia having acquired Betchoice in March, however Ladbrokes’ Australian presence is insignificant by comparison.
The operator has specified in a statement that it “intends that the entity initially acquiring the Regulated Businesses would be a subsidiary of William Hill and not William Hill Online (a joint venture with Playtech)”, and the expert speculated that the move to make Sportingbet a subsidiary of the main group, rather than William Hill Online, could be designed to ensure Playtech provides no obstacle to the acquisition.
In the light of today’s developments, GVC has brought forward the publication of its interim H1 results, with a 138% year-on-year increase in operating profit and a 47% year-on-year revenue rise among the highlights.
GVC CEO Kenny Alexander said: “We have been delighted by the performance of both our B2C and B2B divisions in the first six months of this year, and our confidence in the future is represented by the significant increase in our dividend.”
Sportingbet’s share price has today risen more than 16.5% to 51p a share. GVC’s is up by 12.9% to 196.5p, while William Hill’s is down 1.9% to 312.6p..