William Hill Held Failed Talks with Caesars Over $7.6 Billion Merger

William Hill and Caesars Entertainment were involved in serious merger discussions in the immediate wake of the US Supreme Court’s rejection of the federal ban on state-sanctioned sports betting, according to new reports.

The Sunday Times in the UK claims that talks that would have created a $7.6 billion transatlantic gambling powerhouse began last May but fell apart in August due to poor sales at Caesars’ Las Vegas properties and ultimately a failure to agree on a price.

Reports suggest Caesars had proposed a cash and paper deal that would have valued the UK betting giant at up to $3.8 billion.

If accurate, the reports point to another failed merger for William Hill which has been looking to consolidate its operations and achieve greater scale in the face of tightened regulatory controls over the past few years.

Always the Bridesmaid

New tax regimes in the European markets have made M&A activity highly desirable to the betting industry. While William Hill’s main domestic competitor, Ladbrokes, has merged first with Coral and then with GVC — and another, Paddy Power, has merged with Betfair — the former is in danger of becoming the “perennial bridesmaid” of the betting industry, in the words of The Sunday Times.

In 2015, William Hill’s attempted takeover of 888 came to nothing. A year later, 888 turned the tables and made a joint-play for William Hill in partnership with the Rank Group, which was rejected.

But timing is everything, and some analysts believe the leaking of last year’s secret talks this past weekend could be designed to put William Hill in the frame when prospective bidders come knocking for Caesars.

Eldorado for Caesars and William Hill?

The US land-based casino market is also experiencing a period of frenetic M&A activity. Corporate raider Carl Icahn has recently purchased around 20 percent of Caesars and is pushing for a sale. Caesars rejected an approach by Tilman Fertitta’s Golden Nugget Casinos last year, but it remains a takeover target and Eldorado Resorts is hotly tipped to make a move.

Since the aborted Caesars deal, William Hill has focused on organic growth in the emerging US markets. The British bookmaker already runs sports books for some Caesars properties through its US subsidiary. And last year, it signed a 25-year deal with Eldorado that will see it exclusively run the company’s digital and land-based operations, while retaining the right to strike deals with other casino operators.

If Eldorado does make a bid for Caesars, as expected, it seems someone at William Hill wants the UK company to be part of the package. And considering its share prices have dropped since last summer — a fallout from the British government’s crackdown on fixed-odds betting terminals — there may never be a better time to buy.