Ceasars Warns of Terminating Sports Betting Partnership if William Hill Refuses Acquisition Offer
Caesars Entertainment announced on Monday its entry into advanced negotiations regarding a potential $3.7 billion acquisition of sports betting operator William Hill, potentially igniting a bidding war with a prominent private equity firm.
The move came several days after William Hill revealed it had received separate takeover offers from Apollo Global Management and Caesars. Caesars' offer equates to a 25% premium over William Hill's closing price of 217.60 pence on Sept. 24 – the day before the bookmaker announced the competing offers.
Although Caesars and William Hill have a joint U.S. venture, Caesars warned on Monday that it would terminate the joint venture's mobile market-access rights and William Hill's retail sports betting operations within Caesars' physical casinos if Apollo acquires the operator. This scenario could result in William Hill losing a revenue source at casinos in select states.
If a firm offer from Caesars materializes, the acquisition is intended to occur during the second half of 2021, according to a SEC filing. Meanwhile, Caesars launched an underwritten public offering of 30 million common shares for general corporate purposes, including the potential financing of a portion of the William Hill acquisition.
William Hill currently manages online sports betting operations through Caesars' market access in numerous states. The companies also have a multi-year partnership with ESPN, allowing the media giant to provide link integrations from its digital platforms to William Hill's sports betting apps. In return, William Hill gains visibility through the display of pre-game and live offerings on ESPN.com.
Caesars owns a 20% stake in the U.S. joint venture with William Hill. An acquisition by Apollo instead of Caesars could deprive William Hill of a valuable revenue stream from more than a dozen Caesars properties in states with legalized sports betting, and potentially in upcoming legalizations in states like Louisiana, Maryland, and Missouri.
If the bid is successful, Caesars stated it would focus on William Hill's U.S. assets and "seek suitable partners or owners" for the other businesses, such as the U.K. sports betting and iGaming sectors. In 2008, Apollo and TPG Capital undertook a $27.8 billion leveraged buyout of Caesars, then known as Harrah's Entertainment. However, the terms of Apollo's current offer have not been made public.
As of the end of Monday's trading session, Caesars shares climbed 2%, closing at $58.21. Shares of William Hill fell more than 11%, closing on the London Stock Exchange at 275.90 pence.
- Caesars Entertainment, through its bid, aims to acquire sports betting operator William Hill, a move that could challenge a potential offer from Apollo Global Management.
- The line between Caesars retaining or losing its stake in the U.S. joint venture with William Hill could be decided by the outcome of the bidding war, a scenario that could impact sports betting operations at select Caesars casinos.
- The stake Caesars holds in the joint venture could significantly increase in value if the company successfully completes the acquisition, potentially leading to a shift in focus for William Hill's other business sectors such as U.K. sports betting and iGaming.
