Caesars William Hill Takeover Wins UK Scheme Court Approval, Deal Could Close ‘Imminently’
Posted on: April 20, 2021, 08:53h.
Last updated on: April 20, 2021, 03:23h.
The UK Scheme Court has signed off on Caesars Entertainment’s (NASDAQ:CZR) $3.69 billion takeover of William Hill (OTC:WIMHY), setting the stage for the transaction to soon close.
The Las Vegas-based casino operator revealed its offer for the British bookmaker last September, leveraging an agreement in the US with William Hill to compel the target to accept the bid and not entertain proposals from other suitors.
“William Hill is pleased to announce that the High Court of Justice in England and Wales has today sanctioned the Scheme pursuant to which the Acquisition is being implemented,” said the company in a statement. “It is anticipated that the effective date will be April 22, 2021, which is when a copy of the court order is expected to be delivered to the registrar of companies.”
The UK-based company added it filed applications with regulators to suspend trading of its London-listed shares, noting April 21 should be the last day of dealings in the stock. Entering this year, Caesars executives said the transaction would likely close early in the second quarter.
Following implementation of the acquisition, the William Hill brand will appear on Caesars’ brick-and-mortar sportsbooks, except those at properties with the Caesars Palace name.
Caesars, William Hill Overcome Hedge Fund Challenges
After Caesars dangled loss of the aforementioned US accord over William Hill’s head last year, the takeover was rapidly approved, with market participants speculating the only remaining hurdle was regulatory approvals.
However, late in the game, multiple hedge funds holding stakes in the UK company said they planned to contest the transaction. They contended on the basis that the companies didn’t adequately disclose the terms of their US accord, nor did William Hill effectively convey to investors that Caesars held rights to add names to a list of potential suitors that target could not accept offers from.
Those contentions emerged late last month, making time an issue. With today’s scheme court ruling, the issue is put to bed, with analysts signaling support. Jefferies’ David Katz said the acquisition is a positive for Caesars both financially and strategically speaking.
“The UK High Court ruling announced today removes the remaining challenge by shareholders to CZR’s acquisition of WMH, and the deal should close imminently. From our perspective, the acquisition provides CZR with full ownership and control of WMH’s land-based and digital gaming assets in the US,” said the analyst in a note to clients.
Caesars Next Move
After the Harrah’s operator fully digests its latest takeover, the next move is likely to be divesting William Hill’s international operations. That sale could fetch at least $2 billion, essentially paying for the more than $2 billion Caesars borrowed to make the acquisition happen.
The audience for William Hill’s European unit is rumored to be wide, and perhaps includes scorned suitors, such as private equity firm Apollo Global Management.
Jefferies’ Katz said another issue to monitor is how well William Hill’s technology competes with other players in the US online sports betting market, and whether or not Caesars will need to make bolt-on acquisitions to that effect.
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