Caesars Wraps Up William Hill Asset Sale to 888, Will Allocate Cash to Paring Debt

Caesars Entertainment (NASDAQ:CZR) announced today that it closed the sale of William Hill’s international assets to 888 Holdings.

After counting for fees and taxes, the US casino giant is garnering $730 million in net proceeds, meaning the gross sale price was around $765 million — far less than the $1.09 billion the companies agreed to when the deal was announced last year.

After the repayment of debt and other working capital adjustments, Caesars received net proceeds of $730 million. Caesars intends to use the net proceeds to reduce outstanding indebtedness,” according to a statement issued by the casino operator.

The gaming company closed its $3.69 billion purchase of William Hill last year. When that acquisition was announced in late 2020, Caesars management swiftly announced it would divest the UK-based sportsbook operator’s non-US assets to raise cash. There was no shortage of rumored suitors for what is one of Europe’s most venerable sports wagering brands.

For Caesars Debt Reduction Effort, Every Little Bit Helps

When Caesars originally announced plans to auction off William Hill’s international business, there was speculation it could fetch as much as $2 billion, perhaps more.

Confirming that the current market environment isn’t hospitable toward debt-riddled companies, shares of the Flamingo operator are off almost 59% year-to-date.

Caesars can further materially pare its debt burden with the expected sale of one of its Las Vegas Strip assets. An announcement to that effect was expected in the first half of this year. While it has yet to materialize, there is speculation that Caesars is holding talks with possible suitors regarding the Flamingo.

Prices Declining for Sports Betting Assets

Another potential factor in Caesars’ favor is free cash flow. Some Wall Street analysts see the Harrah’s operator morphing into a free cash flow generating machine as it accelerates its pace of debt reduction, sells underperforming assets, and reins in spending.

While the pace of consolidation activity and rumors to that effect in the sports wagering industry remain solid, slumping share prices are leading to altered acquisition agreements, and Caesars’ deal with 888 isn’t the only example.

Earlier this week, Light & Wonder (NASDAQ:LNW) and Endeavor Group Holdings, Inc. (NYSE:EDR) said they are altering the purchase agreement for the former’s OpenBet sports wagering technology platform. It will now go for $800 million in cash and stock, down from an original purchase price of $1.2 billion.