Apollo Global Shifts Gears, Considers Acquiring William Hill Non-US Assets

Private equity firm Apollo Global Management (NYSE:APO) is reportedly interested in purchasing William Hill’s (OTC:WIMHY) non-US operations after the British bookmaker is acquired by Caesars Entertainment (NASDAQ:CZR).

That’s a change in strategy for the buyout giant, which less than two months ago was rumored to be among the bidders for a full takeover of William Hill along with the Caesars Palace operator. The US-based gaming company is offering $3.69 billion for the UK sportsbook operator in a deal that could be completed early next year.

Speculation swirled late Thursday that Apollo is interested in William Hill’s operations outside the US, which include 1,400 betting shops in its home market, the Scandinavian unit Mr. Green, and an online betting business.

Although sources said that all options remain on the table,  they confirmed that Apollo’s interest in the entire business has waned,” reports The Telegraph.

Now, the next move for Apollo or any other buyer interested in William Hill’s offerings outside the US is to wait for Caesars to seal the deal and then put the international assets up for sale.

How the Situation Evolved

As noted above, the buyout firm was initially interested in the entirety of the British sportsbook operator, seeing value in the European business and massive potential in the US, which is the world’s fastest-growing sports betting market.

Additionally, Caesars made no secret of its desire to rid itself of William Hill’s international operations. It said almost immediately that once the takeover agreement is finalized, it will put assets such as Mr. Green and the UK shops up for sale.

Investors vote on the marriage on Nov. 19. On Caesars’ third-quarter earnings conference call yesterday, executives were limited in the commentary they could offer on the deal. But CEO Tom Reeg said post-deal, sportsbooks at the company’s properties will retain Caesars branding, adding that for “for third-party properties, you should expect that the William Hill brand will live on in the US.”

Apollo Likely to Face Competition

Should Apollo proceed with a move on William Hill’s international business, it’s likely to tussle with rival offers, because the unit has value. It’s worth an estimated $2 billion to $4 billion, meaning that even at the midpoint of that range, Caesars could cover a significant percentage of its acquisition costs by selling part of William Hill.

There’s already talk 888 Holdings is also interested in the UK operator’s European unit, and that Betfred founder Fred Done, who’s a William Hill shareholder, could enter the mix as well.

The sale could also include Caesars parting with seven England casinos it operators, including the Playboy Club London and Manchester235.