Sale agreement reached

Caesars Entertainment announced late Tuesday that it has agreed to buy sports betting company William Hill Plc for approximately ￡2.9bn ($3.7bn) in cash. Completion of the sale, which is subject to shareholder majority approval as well as anti-trust and regulatory authorizations, is slated for the second half of 2021.

opportunity to combine our land based-casinos, sports betting and online gaming”

The takeover follows Nevada-based Caesars and UK-headquartered William Hill’s successful US sportsbook partnership. “The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect,” said Tom Reeg, Caesars Entertainment CEO.

William Hill’s sports betting know-how will bolster Caesars’ existing business offerings, Reeg added. The alliance is expected to boost Caesars’ future expansion in the US by providing customers “with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment.”

Areas of growth identified

Caesars had already identified sports wagering and online markets as areas with exponential scope for growth within the US gaming sector. In a press release, the US gaming and entertainment company said analysts estimated “a potential total addressable market size ranging up to $30-35bn.”

The sale values William Hill stock at 272 pence ($3.51) per share, which gives its shareholders a premium of approximately 57.6% on the closing price of the business on September 1.

The future market valuation is indicative of the tsunami-like speed of gaming legislation across US states, in conjunction with the growing appetite for gaming shown by consumers, plus the partnerships being struck between sports, media, and iGaming brands.

Caesars bid the best option

Commenting on the takeover, William Hill chairman Roger Devlin said his board believed the Caesars bid represented its best option, coming at a price that was attractive to company shareholders.

Devlin added that the acquisition recognizes that US expansion requires an element of “risk and significant investment […] given intense competition in the U.S. and the potential for regulatory disruption in the U.K. and Europe.”

The chairman reassured employees that for now, it would be “very much business as usual”. He concluded that William Hill’s UK and international operations have a solid future, and that his company plans to work together with Caesars to identify “suitable partners to further the long-term growth prospects of these businesses.”

The takeover race

There wasn’t just one horse in the race to acquire William Hill. On August 27, US private equity firm Apollo Management Inc. made a cash offer in writing. Caesars then swiftly entered the arena with bids of its own. It put a damper on Apollo’s hopes by pointing out that, that if William Hill opted for Apollo, it would jeopardize their existing US joint venture.

once-in-a-lifetime opportunity Caesars was never going to let get away

Prior to yesterday’s takeover agreement, Caesars had a 20% stake in William Hill’s US operations, following the $17.3bn Eldorado-Caesars merger in July which handed William Hill all of Caesars’ sportsbooks. The opportunity to acquire William Hill’s 29% share of the US sports betting market, which includes 170 retail sportsbooks across 13 states, was a once-in-a-lifetime opportunity Caesars was never going to let get away.

Caesars had estimated that the joint US venture, including iGaming – which is outside the remit of the pair’s current agreement – could potentially generate between $600-$700m in net revenue for 2021.

“Gathering all our mobile assets, both sports and online […] would be ideal,” Reeg had said prior to yesterday’s big win for Caesars.