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William Hill Offers Big Bucks in MRG Acquisition Attempt

William Hill is looking to acquire the Swedish operator MRG (formerly Mr Green) and they’re willing to pay big bucks in an effort to get the deal done. Earlier this week, the UK-based mega-operator put in a bid of $2.2 billion Swedish Kroner ($306.7 million USD) for all of the company’s outstanding shares and assets. It’s a big deal that reflects the desperate actions UK operators are taking in an effort to ward off the impact of an upcoming tax hike on online gambling.
Anyone looking for a sign that William Hill really, really wants to make the deal happen, should consider how much the company is willing to pay for outstanding MRG stock. Their offer of $7.50 a share includes a 48.5 percent markup on MRG’s stock price (as of Tuesday).
In a statement to the Financial Times, a William Hill representative said that the proposed deal would, “…accretive to earnings from the first full year of ownership before synergy benefits, and achieve returns above William Hill’s cost of capital.” That’s a pretty dense piece of corporate speak that belies the conundrum facing every UK operator, how to raise revenue and diversification ahead of some major tax increases the UK is imposing on the online gambling business?
It’s a risky gambit for a business that certainly has some expertise in how to play the odds. But not everyone is convinced that acquiring MRG is a good deal. Gaming industry analyst Paul Leyland told the Financial Times that the proposed deal comes with some risks saying, “It increases their digital footprint, but it doesn’t massively increase their online revenue and exposes them to countries with unclear regulations or taxation.”
Investors weren’t quite as critical as William Hill’s stock rose 10 percent in trading once news of the potential acquisition broke.