William Hill completes WHO acquisition
Hills to pay £424m in cash for Playtech's stake in business " Playtech to receive share of profits for year to date
William Hill will today complete its acquisition of Playtech’s 29% stake in William Hill Online (WHO) for a total consideration of £424m, the operator has announced.
The acquisition cost represents a 3.5 times cash-on-cash return on the solutions provider’s initial investment when the joint venture was established in December 2008, valuing the online business at around £1.5bn. Playtech will also receive a share of WHO’s profits for the year to date “ an amount which will be announced “in due course”, most likely during Hills’ Q1 results announcement this Friday.
In a statement to the London Stock Exchange this morning William Hill’s board of directors said the purchase was “consistent with the long-term strategic evolution of the group”, describing the division as “a strong, well-established industry leader”.
The operator’s chief executive Ralph Topping added that he was “pleased” to assume full ownership of what he described as an “attractive, high growth, high performing business”.
The funds for the deal will be raised through the issuing of £375m in new shares, with a further £50m from the Bridge Credit Facility, set up to finance the takeover of Sportingbet’s Australian and Spanish businesses. This acquisition threatened to complicate Hills’ valuation process, when the supplier published a note in December last year, suggesting that the purchase be taken into consideration when working out the value of Playtech’s 29% stake. However, the Sportingbet assets were ultimately discounted from the process.
Hills first announced that it was to begin the evaluation in October 2012, before giving Playtech formal notice that it was to trigger the process a month later.
It was then confirmed in March that both parties had settled on the £424m valuation, with the call option receiving near-unanimous approval from Hills’ shareholders at an extraordinary general meeting held later the same month.
Less than two weeks after the call option had been announced, Playtech finalised a five-year licensing deal with Ladbrokes, described by Lads CEO Richard Glynn as “next phase of [his business’] reinvigoration”. However, Lads today released its first-quarter results ahead of schedule, revealing a £13m drop in profits for the quarter. The results announcement warned that while the deal would transform its non-sports betting business, “the risks of disruption from transition are inevitable” and as a result expected to see “digital” profits decline in 2013.