The wheels came off a proposed merger between William Hill and Amaya today, as the UK bookmaker walked away from the deal following objections from its shareholders.
On Friday Parvus Capital Management, the company’s biggest shareholder, publicly criticized the proposal as a “waste of time” and a “value-destroying deal,” and urged the board to concentrate on “maximizing value for William Hill owners by considering all alternative options available, including a sale of William Hill.”
The criticism forced a wounded response from Amaya, which accused Parvus’ assessment of inaccuracy.
But Parvus co-founder Mads Eg Gensmann subsequently told Reuters that Amaya’s core business of online poker was the least attractive segment within the sector and the proposed deal would weaken William Hill’s strategic position in the long term.
He also cited concerns about the recent devaluation of the pound against the Canadian dollar since the Brexit vote.
“Effectively, you’re buying an overvalued asset using an undervalued currency,” he said.
Negotiations Had Been Ongoing “for Weeks”
According to London’s Financial Times, multiple sources close to the negotiations said the management of both companies had been in talks for weeks and had been “confident of completing a deal.”
But William Hill chairman Gareth Davis said that the premature leak of the talks by Reuters on October 7 meant that shareholders were informed of the proposal before the due diligence process had been completed, which may have hastened the demise of the deal.
“The general feeling [among shareholders] was a lack of appetite to pursue the discussion,” said Davis. “A lot of it is down to a lack of contemporary knowledge of Amaya. I don’t think they have been great at communicating about their business.”
Amaya and William Hill had talked of a multi-billion-dollar “merger of equals” to create “a clear international leader across online sports betting, poker and casino,” in a combination that was full of “sound industrial logic.” But William Hill’s shareholders disagreed.
“After canvassing views from a number of William Hill’s major shareholders, the Board has decided that it will not pursue discussions with Amaya,” the company said in an official statement. “Accordingly, the Board has informed Amaya that it is withdrawing from discussions and wishes Amaya well for the future.”
Divyesh Gadhia, Chairman of Amaya, said: “Together with our financial advisors, we evaluated a wide range of strategic alternatives to maximize shareholder value and have concluded that remaining an independent company is in the best interest of Amaya’s shareholders at this time.”