Online gambling group 888 to buy William Hill’s international operations
Deal represents a strategic shift for the digital-only company as it adds William Hill’s 1,400 betting shops
Online gambling company 888 Holdings is buying the international operations of bookmaker William Hill after seeing off rival bids from private equity.
The deal gives the businesses an enterprise value of £2.2bn, according to a statement. Las Vegas casino giant Caesars Entertainment bought William Hill in April to secure its US assets and is selling the rest to pay down debt.
The reverse takeover gives 888 more scale to capitalise on a surge in demand for digital gambling during the pandemic. The company’s stock price has doubled in the past year.
The deal also represents a strategic shift for the digital-only company as it will add William Hill’s 1,400 betting shops, a familiar sight in British shopping districts.
888 shares were down 1.3% in London on Thursday. William Hill’s 2026 bonds rose around 1.5p on the pound to £109.59, according to CBBT data tracked by Bloomberg, the highest since mid-June.
UK betting companies have been closing many of their physical stores after a government crackdown to reduce problem gambling made them less profitable. 888 plans to keep the remaining William Hill shops open, CEO Itai Pazner said in an interview.
“It’s a stable business, positive cash flow, profitable — very profitable — so I see no reason not to keep it, and keep investing in it,” he said by phone, referring to the brick-and-mortar stores. “It’s obviously not a significant growth business, but it is a very stable business.”
The company will be able to use the William Hill brand everywhere except the US, where Caesars still owns it, Pazner said. The two businesses will work on creating a joint management team, he added.
888 has been a relatively small player in a UK betting market dominated by the likes of Flutter Entertainment and Entain. Analysts at Peel Hunt estimate the William Hill deal will roughly quadruple its size. They say the new combined entity would have earned $664m in the financial year to March 2021, compared to $164m for 888 alone.
888 had submitted the highest bid as it competed with private equity firms for the business, Bloomberg News reported previously. It was vying with Apollo Global Management after CVC Capital Partners, the owner of sports betting firm Tipico, dropped out of the bidding.
The spread of smartphones alongside technical advances may drive the value of the global online gambling market to as much as $117bn by 2025 from $74.5bn today, according to research firm H2 Gambling Capital.
That’s sparked a global race by casino operators, sports team owners, media companies and private equity firms to establish a strong position in the sector.
“This is an attractive deal,” said Jefferies analyst James Wheatcroft in a note to clients, which highlighted the merits of scale, diversifying across products and geographies, and cost savings.
888 will raise about £500m to help fund the transaction. It already has £2.1bn of debt financing fully committed from JPMorgan, Morgan Stanley and Mediobanca.
Bloomberg News. More stories like this are available on bloomberg.com
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