Playtech JV "needs to change", admits Topping
Admits deal in its current form is "not appropriate" and that it is seeking "strategic freedom" - will come to a decision on call option at the end of this summer.
William Hill will reach a decision at this end of this summer on whether or not to exercise its call option on Playtech’s 29% stake in the bookmaker’s online joint venture, its group chief executive told analysts this morning.
Admitting the deal in its current form is “not appropriate going forward” and that it sought further “strategic freedom”, Ralph Topping said that both parties recognised there “needs to be a change”.
“If not then we need to be adult about the [fact that the] partnership needs to alter or we exercise the call option,” he said.
The joint venture, signed in 2008 and in the same year as Topping became group CEO, generates almost 40% of the bookmaker’s operating profits. During its annual results announcement this morning William Hill said that its total group operating profits for the full year 2011 were £275.7m, 0.4% from £276.8m on the previous year. William Hill has a call option on Playtech’s stake at the end of next year.
The relationship has soured over the last 12 months with William Hill forced to take out an injunction on its JV partner in order to block the Israeli firm from doing similar deals with rivals Ladbrokes. It was also forced to fly out a number of its tops executives, including WHO chief executive Henry Birch, following a 10-day walkout by 600 customer management staff in Israel, Bulgaria and the Philippines after employees thought their jobs would be moved to Gibraltar.
Topping said he would assign a team of William Hill experts to assess the deal and that, over the course of this summer, would reach a conclusion.
“The key consideration for us is strategic freedom,” he added, refusing to going into further detail. “This is very important for us, especially in a world that is changing and regulating.
Topping said that when it was first signed that he knew the deal would be successful but “not this successful this quickly”, admitting that the bookmaker had had a number of “colourful episodes” with Playtech over the years.
“Looking back over the last three years it has been very successful but we recognise that if we were to go back in time we wouldn’t have structured the deal as we did and that it’s not appropriate going forward.
“We have been open and honest with Playtech and, over the last quarter myself and the chairman [Gareth Davis] have met [on a monthly basis] with their chairman and chief executive, often with a nice bottle of red, and we will continue to discuss matters with them as time goes on,” he added.