Las Vegas casino operator Caesars has seemingly made William Hill PLCs (LON:WMH) board an offer they cant refuse and amidst ever-increasing regulatory scrutiny perhaps UK investors shouldnt refuse it either.
William Hill shares fell around 10% on Monday as Caesars announced its possible offer, which if/when it is made, will be pitched at 272p per share or £2.9bn in total.
At the same time, Caesars potentially spiked a rival approach from Apollo by threatening to cancel its American partnership with William Hill if the private equity firm were to acquire the British bookie.
That would see William Hill lose its access point into the US mobile betting market along with its rights to operate sportsbooks at Caesars casinos.
Stockbroker Peel Hunt described the threat as “an extremely effective poison pill” that is likely to deter competing bidders.
William Hills board has already indicated to Caesars that the £2.9bn deal value is at a level at which “they would be minded to recommend.”
Whatever the board recommends and, indeed, whatever William Hill shareholders accept it will be a crossroads moment for the company, not least because the strategic and regulatory changes that are afoot in the industry.
America is steadily opening up for online gambling. This has been an ongoing investment theme for many years and that arguably the most iconic name in Las Vegas may soon stand-over one of Europes largest betting brands marks this validation.
Pending blight in Blighty
At the same time as America warms up to online betting, UK regulators are putting the industry under stricter scrutiny.
Only last week it was reported that Downing Street had taken control of an upcoming review of gambling legislation.
Boris Johnson and his advisors want to reform the industry, according to The Guardian, which added that the Prime Minister was now steering the planned review.
The governments Department of Digital, Culture, Media and Sport (DCMS) is due to launch the review that seeks to reform the 2005 Gambling Act.
Rumoured changes could include new restrictions on advertising, while other cross-party campaigners have sought potential focal points such as stake limiting or limiting the frequency of bets, along with demands for tighter controls on customer affordability checks.
A premium-priced takeover offer from an American company with a focus on American business, leaves William Hill and its shareholders with an opportune chance to exit.
With a rival bidder now suddenly seen as unlikely, the bookmaker risks looking a gift horse in the mouth if it is to quibble over price.
A future of growth in the United States
Following its July 2020 acquisition of Eldorado Resorts, Caesars owns and operates 54 US casinos – with an aggregate of 64,000 slots, 3,000 gaming tables across 4mln square feet of gaming space plus 300 on-property rRead More – Source