The merger between William Hill and 888, agreed in September 2021, is considered a reverse takeover and requires approval from 888 shareholders. Shareholders will meet in London on 16 May to consider the deal, and proxy voting is available for those unable to attend in person. The prospectus provided by 888’s board outlined the reasons for backing the deal and shared information about both William Hill and the impact of the Gambling Act review on the combined business.
The prospectus, released shortly after 888 and Caesars agreed to reduce the purchase price by £250m, highlighted the change in the macro-economic and regulatory environment as the reason for the reduction. It noted that the review of William Hill’s license to operate in Great Britain prompted the business to set aside £15m to cover potential costs, with Caesars providing an indemnity for certain brands. Despite these challenges, 888 stated that the deal made strategic sense at the new purchase price, as it would significantly increase their scale and product mix, and strengthen their position in key markets.
Furthermore, the deal would help 888 diversify by expanding its exposure to sports betting and enhancing its presence in locally regulated markets. Acquiring the largest retail bookmaker in the UK also presented an attractive omni-channel opportunity, allowing 888 to leverage its retail footprint to provide a better customer experience. The company anticipated significant cost synergies from the merger, including annual savings of £100m by 2025. This would be achieved through the creation of a single proprietary platform, elimination of duplicate marketing efforts, and reduction of duplicate license fees.
The prospectus also provided financial performance details for the non-US William Hill business. In 2021, the business generated £1.24bn in revenue, with slightly over half coming from UK online operations. Retail revenue declined due to Covid-19 lockdowns, while international online revenue also dipped. The majority of William Hill’s revenue came from locally regulated markets. Although the business reported a net loss of £229.4m after including interest, tax, depreciation, and amortization, the new group’s combined revenue for 2021 would have been $2.68bn (£2.13bn/€2.53bn), with a net loss of $368.5m.
Considering the UK government’s ongoing Gambling Act Review and the increased exposure to the UK market, 888 acknowledged the potential impact on the new business. Proposed policies could include slot stake limits, stricter affordability criteria, and advertising restrictions. While the exact financial impact was challenging to calculate, a slot stake limit of £2 per spin could potentially reduce revenue and earnings. However, 888 did not anticipate a significant negative impact on EBITDA from potential advertising restrictions, drawing on previous experiences in Spain and Italy.
Regarding employees, 888 stated that a full review of the William Hill business would be conducted after the deal’s completion to identify cost reduction opportunities through the elimination of unnecessary duplication. No decisions have been made in this area yet. The deal is expected to close this quarter, with a long stop date of 30 June. 888’s board expressed confidence that the integration of the target group could be achieved without causing material disruption to the underlying operations of both the 888 group and the target business.
