William Hill Wagers £242 Million Mr Green Deal Will Rescue It from Domestic Headwinds
Posted on: October 31, 2018, 12:55h.
Last updated on: October 31, 2018, 12:55h.
William Hill hopes to buy Swedish online gaming group Mr Green & Co (MGC) for £242 million ($308 million).
The UK sports betting giant announced Wednesday that its proposal has been presented to MGC shareholders and already has the backing of a group that collectively owns 40 percent equity in the company.
William Hill said the deal would help it to diversify as it seeks to break its reliance on the UK market, which has become a challenging regulatory environment, especially for its retail betting operations.
Based in Malta and listed on the Swedish Stock Exchange, MGC operates the Mr Green and Redbet online casino brands and has strong exposure to markets such as Denmark, Italy and Latvia, as well as the UK and Ireland.
In Q3 2018, 40 per cent of MGC’s revenues were derived from western Europe, while 36 per cent came from the Nordic countries and 21 per cent from central, eastern and southern Europe.
“This proposed acquisition accelerates the diversification of William Hill, immediately making us a more digital and more international business,” said William Hill CEO Philip Bowcock in an official statement.
William Hill will move from a single brand to a suite of brands that can maximize growth opportunities moving forward in new and existing markets,” he added.
In August, William Hill announced there would be “long-term consequences” for its retail betting business when government reforms related to fixed-odds betting terminals (FOBTs) come into force.
The operator said it could close as many as 900 outlets across the country and would be forced to “remodel” its land-based betting operations.
Tax Hike Will Increase M&A Activity
But the outlook has got worse since. On Monday UK Chancellor Philip Hammond announced he will increase taxes on online gambling operators from 15 percent to 21 percent to offset lost tax revenue from a slash in stakes on FOBTs.
This is likely to promote a flurry of merger and acquisitions in the coming year as UK gambling companies seek to cut costs through synergies and achieve greater scale in order to better absorb the tax hike.
William Hill has already seized opportunities presented by the newly liberalized US sports betting market by the scruff of the neck.
Already the market leader in Nevada, it’s building a strong presence in New Jersey and has signed a deal with America’s second-biggest regional casino company, Eldorado Resorts, which will expand its US footprint significantly.