Poll: Does a William Hill/Amaya merger make strategic sense?
As the potential tie-up takes public criticism, we ask whether the combination is a smart play for both firms
William Hill and Amaya’s merger negotiations hit a very public stumbling block last week, when Hills’ largest shareholder Parvus issued an open letter saying the deal would “destroy shareholder value”.
Parvus’ main concerns were the amount of debt the combined firm would take on â around £2.8bn â and a potential £710m fine hanging over Amaya from the US state of Kentucky.
The investor also criticised Amaya’s core business, calling poker “the least attractive segment in online gambling,” and a “mature if not structurally declining revenue stream”.
In addition, it questioned the combined firm’s ability to cross-sell poker players “who take part in a game of skill,” into games where the “house ultimately wins”.
Other commentators have criticised Amaya’s grey market exposure and controversial shareholders, including former CEO David Baazov, who holds 18% of the company and is currently fighting insider trading charges.
However William Hill and Amaya clearly disagree and with no other major (public) objections from Hills’ other major shareholders or indeed Amaya’s, the talks are continuing.
For some, the potential benefits of a combination are clear to see, with the firms’ strengths complementing each other’s weaknesses.
Amaya is dominant in poker with a 71% market share and generating good profits, while experiencing unparalleled success in cross-selling into casino.
The vertical is set to overtake 888casino in terms of revenue by the end of the year with almost no external marketing, according to Amaya.
Its biggest weakness is sports betting, where its BetStars brand is struggling to gain traction despite around 40% of Amaya customers also betting on sports online.
Adding Hills’ sportsbook to the other two leading products would feasibly create a “market leader across all key egaming verticals”, as the two firms put it. While Hills’ casino would also strengthen Amaya’s offer.
Likewise, the companies’ geographical profiles appear complementary. Amaya is active in almost every major regulated market in the world, giving Hills some much-need expansion away from its core UK market.
And Amaya sources suggest grey market concerns are overplayed with regulated territories accounting for around two thirds of revenues.
With this in mind, this week’s EGR poll wants to know whether you believe a William Hill/Amaya tie-up makes strategic sense. Have your say on the right-hand side of the page.