William Hill’s largest shareholder has been trying to spark new merger and acquisition talks over the past several months, The Sunday Times reported. Privately owned hedge fund Parvus Asset Management owns a 14.3% share in one of UK’s largest gambling operators.
The UK Government is set to publish a triennial review of the country’s gambling industry with particular focus on the highly controversial fixed-odds betting terminals. It is believed that new measures on how the machines are to be regulated will be introduced and these will certainly come as a big blow to the operator’s profitability. This is why it is not a surprise that William Hill, whose UK retail business is greatly dependent on the FOBTs, as well as its investors are looking for ways to prepare the company for whatever the future may be holding.
The major bookmaker has not had its most shiny times over the past several years. Its underperforming online division and bettor-friendly results at the 2016 Cheltenham Festival dragged the company’s full-year profit lower than originally expected.
William Hill’s name was involved in two potential merger and acquisition deals last year. In mid-2016 the company was presented with two offers to be acquired by 888 Holdings and the Rank Group. The bookmaker rejected both bids as it was not particularly content with the price offered.
Later on, William Hill entered merger talks with Canadian gambling giant Amaya, owner of PokerStars. The two companies would have formed one of the largest gambling operators in the world, if a merger had indeed taken place. However, the potential deal was publicly criticized by Parvus as one that undervalued the company significantly and would have had a detrimental impact on shareholder value. Pressured by its largest investor, William Hill’s board walked out of the deal.
It seems now that Parvus would support a sale of the bookmaker to other interested bidders. It is believed that the hedge fund would favor a takeover offer from an operator with significant online gambling presence. It is also understood that Parvus may OK a takeover bid from major B2C and B2B iGaming company GVC Holdings, which last year added bwin.party’s brands to its portfolio.
Word has leaked out that 888 Holdings may, too, still be interested in a tie-up with the major UK bookmaker. The two operators have been circling each other for several years now but without much success.
William Hill currently owns one of the largest chains of betting shops across the UK. It managed 2,329 such shops at September 30, 2016, with those hosting thousands of FOBTs. The industry review is expected to result in a serious reduction in the maximum amounts staked at the machines, which will hit the bookmaker’s already shaky profitability in quite a negative manner. In other words, a sale of the gambling company may be one its best chances to secure better financial performance at such a difficult time.
