Caesars William Hill Auction Nearly Done, Could Fetch up to $2.75B

Caesars Entertainment’s (NASDAQ:CZR) auction of William Hill’s international business is nearly complete. It’s possible the US gaming behemoth will rake in more for those assets than previously expected.

When Caesars revealed plans to acquire William Hill late last year, it made clear it was only interested in the target’s US operations, and that it would sell its 1,400 High Street betting shops and European online gaming unit. Caesars closed on its $3.69 billion purchase of the UK-based sportsbook operator in April, subsequently revealing plans to announce the sale of William Hill’s non-US business no later than the fourth quarter.

Initially, analysts forecast the seller could command $1.65 billion to $2 billion for William Hill’s non-US units. But that range has since swelled from $2.33 billion to $2.75 billion, reports The Times.

Those elevated estimates could be the result of a brisk mergers and acquisitions environment in the gaming industry that’s bringing rampant consolidation rumors and confirmed deals to the sports wagering space. While the assets being sold by Caesars offer no exposure to the fast-growing US market, those pieces are coveted by buyers, because William Hill is one of the most recognizable betting brands in Europe.

And Then Were Three for William Hill

With the start of the fourth quarter looming on Oct. 1 and Caesars’ auction process drawing to a close, it’s clear that there are three viable bidders for the William Hill businesses.

The Times reports Caesars requested best and final offers from the prospective buyers by close of business Wednesday.

For months, rumors suggested Apollo is the leading contender, not only because of its deep pockets but also because it might be willing to take on Caesars’ seven UK casinos, including Playboy Club London. Management for the Nevada-based company is focused on the US and is mostly uninterested in pursuing markets outside North America.

The More the Better for Caesars

Obviously, the more Caesars wrings from the sale of William Hill’s international businesses, the more it can defray the $3.69 billion purchase price.

That’s important to investors, because Caesars carries one of the highest debt burdens in the industry, and because it’s planning to spend $1 billion over several years to boost its US iGaming and sports wagering footprints.

By way of the William Hill acquisition, Caesars got a 24.5 stake in iLottery operator NeoGames (NASDAQ:NGMS), which was worth $258.44 million as of Aug. 27. If Caesars were to liquidate that asset (it hasn’t said it will) and command $2.75 billion for the William Hill assets, its costs for the acquisition would likely fall below $700 million, confirming it got a sweet deal in buying William Hill.