888 Holdings Recommended as Play on Bidding for William Hill Non-US Assets

Caesars Entertainment (NASDAQ:CZR) is expected to initiate the sale process of William Hill’s international assets this quarter and could announce a buyer at some point in the second half of 2021. One analyst views 888 Holdings as a way for investors to capitalize on that divestment.

Israel-based 888 is rumored to be among several suitors for William Hill’s international assets, which Caesars is looking to part with. The Las Vegas-based gaming company recently closed its $3.69 purchase of the British bookmaker — a transaction in which the Flamingo operator made clear it was only interested in the target’s US operations.

Investors should buy 888 shares ahead of any deal to acquire the William Hill assets, in our view,” said Jefferies analyst James Wheatcroft in a recent note.

He adds a deal for the William Hill assets that could not only help the Israeli gaming company identify avenues for cost reductions, but also potentially lead to a double-digit increase in earnings per share.

Caesars is selling William Hill’s 1,400 UK and Ireland betting shops, as well as the UK and European online wagering businesses. Analysts and industry observers expect the casino giant can fetch at least $2 billion in the sale.

888 Facing Plenty of Competition

In a March interview with The Times, 888 CEO Itai Pazner confirmed his company’s interest in the William Hill assets. It’d be a sensible purchase for the operator because it’s currently heavily involved in iGaming and online poker, but its sports betting exposure is small relative to peers. That footprint would be bolstered by acquiring William Hill’s international units.

Additionally, there’s speculation that Betfred and Entain could potentially entertain bids for the William Hill shops, though that could trigger regulatory concerns because both are already prominent UK operators. There’s also chatter that, owing to William Hill’s Sweden footprint, Betsson and Kindred could join the fray, too.

888 Doesn’t Need a Deal

For investors, the good news, as Jefferies’ Wheatcroft sees it, is that 888 doesn’t necessarily need to win the William Hill bidding process to generate share price appreciation.

“Another acquirer may pay more for the William Hill assets. Even so, we argue 888 is undervalued, with 20% upside to our share price target,” said the analyst.

888 has also been mentioned as a potential takeover target. But that rumor surfaced over four months ago, and there’s been no follow-up talk since then.