UK gaming giant 888 is finalizing a deal to purchase the UK assets of William Hill from Caesars Entertainment and, according to published reports, will be getting those assets at a much smaller price than was originally anticipated.
888’s road to William Hill started last year when Caesars Entertainment purchased William Hill for $4 billion. William Hill had been running Caesars’ US sports betting operations and the acquisition was a logical move. Caesars planned to sell off William Hill’s substantial UK assets, which consist mostly of retail betting shops, for somewhere between $2.5 billion and $2.68 billion. 888 answered the call and the deal began moving forward.
Now, after some significant behind-the-scenes accounting work, that price has been dropped by $250 million to “reflect the change in the macro-economic and regulatory environment”. Those changes mostly involve a deferred compensation package for executives and some changing real estate values. 888 has also clearly factored in the impact of the impending review of the UK Gambling Act of 2005, which will likely change the regulatory environment for UK operators considerably, into the price of the deal.
888 officials were keen to point out that nothing had substantially changed regarding their attitudes towards the deal sayin, “The board continues to believe the acquisition has highly compelling strategic and financial benefits, with the current macro-economic environment and changing market conditions across its key markets only serving to strengthen the rationale for bringing together two highly complementary businesses and combining two of the industry’s leading brands.”
Investors across the world clearly felt the same way about the deal as 888 shares soared a whopping 30 percent on the news that 888 would have to come up with less cash to finance the deal. And with a few hundred million in extra cash in their pockets, 2 million new customers, and 1400 new retail shops to work with, 888 does seem like a good investment.
The deal is expected to close sometime in June.