What Will William Hill Be Like After the 888 Takeover?
The gambling world has been dominated by a number of acquisitions in recent years, and this has seen various companies being bought out by larger brands. Back in May of 2021, it was announced that Caesars Entertainment had plans in place to sell off the vast majority of William Hill’s UK and European and assets.
Many people were stunned at this revelation, considering that Caesars had only completed its £2.9 billion takeover of William Hill the month prior. However, the company said that it is doing this so as to place prime and sole focus on its new interests located in the United States. Ultimately Caesars were only interested in getting their hands on the proprietary software and huge online experience William Hill has in order to try to dominate the US market, which will soon be the biggest gambling market in the world. Hill’s are largely saturated in Europe and so Caesars only saw value in the US assets. The fact they have bought WH for £2.9 billion and sold the non-US assets for £2.2 billion means they have ended up paying £700 million for the US assets. Many will see this as good business.
William Hill has around 1,400 land-based betting shops across the UK, and these are estimated to be worth around £1.5 billion in total. The sale of these would allow Caesars to recoup more than half of its initial investment in William Hill, making it an ideal route for the company to take. Once it was discovered that the company was looking to sell off William Hill’s UK and European assets, a bidding war began. In July, it was reported that the US private equity firm Advent International had entered into that war, and it was said to be amongst the leading bidders. Yet, it had strong competition from Apollo Global Management and 888 Holdings, as well as others.
It now seems as though Caesars has accepted a deal from 888 Holdings for the sale of those assets. The bid from Apollo Global Management was one that the company was reluctant to accept, as it was said that it would “jeopardise a joint-venture” between the two brands. The deal was confirmed by the 888 Holdings brand, which had put in a £2.2 billion bid. The acquisition saw 888 Holdings also state that it has every intention of keeping the bookmaker’s stores as part of its entry into bricks-and-mortar gambling activity. The deal is now expected to complete by early 2022, as long as it achieves approval from shareholders. Those investors holding 47% of 888 shares already gave their approval for the transaction.
What does this deal mean for the William Hill brand? What will things be like once the takeover is completed? Can it be expected that 888 Holdings will dramatically alter the scenario for the historic brand that has been active in the UK for over 80 years?
The Takeover Deal Between Caesars and 888 Holdings
The acquisition of William Hill’s UK and European-facing assets will see 888 Holdings grow to become much more expansive than ever before. It is likely to rival such vast companies as Bet365 in size, and the chief of 888, Itai Pazner spoke of the takeover as being a “transformational and hugely exciting moment in 888’s history”. This was backed up by the international chief executive for William Hill, Ulrik Bengtsson, who commented that the strategies of both brands are “highly complementary”.
Of course, not only does the acquisition provide 888 with access to all 1,400 of the UK-based high street betting shops, but the 10,000 employees operating within them, too. For the moment, 888 operates solely as an online betting company, and the fact that it will have so many brick-and-mortar shops once the deals has been completed means that its presence will likely be felt outside of that sphere. 888 will definitely be looking to capitalise on the market share that William Hill had steadily increased prior to the takeover by Caesars Entertainment.
Creditors such as JP Morgan provided the more than £2 billion needed by 888 Holdings so that it could acquire the William Hill assets. It is now in the hands of shareholders and the Financial Conduct Authority to give the go-ahead for the deal to be finalised. And it is due to this that the purchase is not likely to be completed until the first half of next year.
It is also expected that the deal will provide annual revenue of £1.8 billion for the 888 brand, according to information released by the company. Originally, it was thought that 888 may proceed with offloading all of the betting shops and simply stick with the online business, which is essentially what it knows considering 888 has only ever been an online operation. However, the opportunities that the retail business is able to provide were enough to sway it towards keeping them.
William Hill proceeded with cutting down its number of high street stores in 2019, reducing the active number from 2,333 to the current 1,400. That process was heavily accelerated by the COVID-19 pandemic as well as the fact that revenue declined due to the cut in the maximum stakes able to be placed on FOBTs.
It was also thought that Betfred, a high street rival of William Hill, had showed interest in the purchase of the UK stores. Had that been the outcome, then Betfred would have almost doubled its current number of retail outlets in the United Kingdom.
888 Determined to Keep Retail Shops Open
When questioned over the intent to keep the high street stores, Mr Pazner said that it is definitely how things will play out. Even though the UK is expecting to witness a landmark review of the Gambling Act sometime in the first half of next year, Pazner is showing no negativity with regard to this. In fact, he said the purchase by 888 Holdings of William Hill’s UK and European assets made “even more sense” with the uncertainty surrounding regulations. A larger company such as 888 will be able to cope with change a lot better than others, he said.
Can it be said that 888 is in a good position for this particular side of the industry, though? After all, it has only had online experience so far. Some people have already questioned the abilities of the company to succeed in the land-based world. After all, the two sectors are quite different when it comes to the business side of things.
It’s not the first time that 888 has showed interest in uniting with William Hill, though. In 2016, the company teamed up with Rank, which has a large bingo hall presence in the UK. Through this, it had hopes of crafting some sort of three-way merger. Yet, William Hill had various reservations over entering into such a deal with Rank and 888. Why? Because it didn’t believe that it would get anything out of it. While raising the position and status of 888 and Rank, the likelihood is that William Hill would have simply ended up coasting along rather than achieving anything from the deal. Many presumed it was more of a bid to turn the tables though, considering that in 2015, William Hill had entered a bid of £700 million to take over 888.
With the takeover deal having just been confirmed the other way around though, 888 Holdings will become even bigger in the industry than it already is. According to investment director at AJ Bell, Russ Mould, sales for 888 could be boosted in an extreme way, resulting in almost triple the earnings for the brand.
Keeping the high street stores will be a big part of why this will be the result, according to 888. The new leaders of the British betting scene stand out as being Flutter (which owns brands like Paddy Power and Betfair), Entain (responsible for Ladbrokes Coral), Bet365 and, as a result of this transaction, 888 Holdings. That is quite the change around in comparison to the 1970s and 80s, when Ladbrokes, Coral, Mecca and William Hill were front and centre. None of those brands is now operating as an independent company.
Potential Changes That Could Take Place
With the fact that 888 will become the owner of the William Hill betting shops and European assets, what changes could possibly be on the cards for them? Will it be likely that the retail shops change their name to match that of 888? If so, that would mean that retail bettors will no longer see the famed William Hill logo and name on the store fronts. Will this bring in as many players as before? After all, the William Hill brand has been a longstanding name on British high streets. 888 Holdings may not have as big an appeal for those gamblers.
What’s more, can it be said that 888 has the experience needed to run such a historic brand in the UK? Granted, they will keep the same employees according to the CEO, which is fine when it comes to maintaining things as they are. However, should 888 choose to introduce new rules and ways of doing things, can it be said that these changes will be for the better? 888 is well-versed when it comes to the online gambling scene, but it does not have that same experience when it comes to retail betting shops. For the time being, it is not clear what the future will hold for these betting shops with regard to how they are run. That lies firmly in the hands of 888, and it may need to bring more people on board who have experience with operating such stores in the United Kingdom.
That being said, the move has also achieved some positive reinforcement, primarily from Susannah Streeter. Working as a senior investment and market analyst at Hargreaves Lansdown, Streeter said that the deal signals that there actually is still a future for the UK’s high street betting shops. She said that the acquisition by 888 and the intention of the company to continue operating them provides a lifeline.
She mentioned that despite this being a “vote of confidence in the network”, it is likely to also bring “a further shake-up in the branch footprint”. That can only be expected though, considering a large shift to online gambling has been experienced. This has come about not solely due to general change in people’s preferences, but also due to the effects of the pandemic closing down betting shops for a number of months. Time will tell whether or not 888 can turn people back to retail betting shops once the takeover is completed.
Series of Takeover Attempts by US Firms in the UK
The purchase of William Hill earlier on in the year by Caesars Entertainment was just one of several attempts by U.S. firms to get their hands on the UK’s thriving gambling businesses. And while 888 was founded by an Israeli group, this is the first deviation away from that USA standard.
That being said, during 2020, MGM Resorts was in talks with Entain, which owns Ladbrokes and Coral. A potential £8.1 billion bid was brought forth by the U.S. company, which would see it completely take over the Entain brand and be the new owner of the betting brands. However, in January of 2021, it was announced that MGM had backed out of the takeover bid after Entain rejected the offer, citing it as a significant undervaluing of the company. The U.S. brand said it was not going to increase its offer to try and get its hands on Entain after that.
Once that deal had fallen through, MGM Resorts was banned from being able to make another offer for Entain for a period of six months. That restriction has now come to an end, but an alternative offer has not been put forward. Potentially, MGM has given up on becoming the new owner of Entain. In the meantime DraftKings have now come in with a staggering $20 billion offer for Entain, nearly double what MGM offered. Showing that the race to hoover up the big European gambling firms to acquire their software and knowhow is hotting up even further. In many ways the £2.9 billion purchase of William Hill by Caesars now seems like a bargain in comparison.
Prior to this, a deal was organised between Flutter and The Stars Group, which potentially gave various U.S. brands the idea to ‘invade’ UK shores for betting businesses. That deal took place at the end of 2019, and it saw Flutter pay about £10 billion for The Stars Group, which was the owner of Skybet at the time. Through it, the world’s largest online betting firm was created. Today, Flutter employs more than 13,000 people around the world, and it also increased its presence in the American daily fantasy sports scene, purchasing additional shares in FanDuel for $4.2 billion.
Whether or not other companies will be targeted by U.S. betting firms in the future remains to be seen. For now though, it seems as though the 888 Holdings group is dedicated to its plans for the William Hill betting shops and European assets.
