William Hill Gains as U.K. Bookmaker Discusses Amaya Mergerby
Stock advances as much as 6.5%, biggest climb since Aug. 9
Combination would be latest consolidation of betting industry
William Hill Plc shares rose in London after the U.K. bookmaker said it’s in talks on a possible combination with PokerStars owner Amaya Inc. of Canada, a deal that would further transform the landscape of a rapidly consolidating industry.
The stock rose as much as 6.5 percent to 313.6 pence, boosting the company’s market value to 2.7 billion pounds ($3.3 billion). Amaya gained 8.2 percent on Friday after Reuters reported that the company had received interest from parties including William Hill.
A deal would be the latest in a round of betting-industry consolidation that has included the combination of competitors Ladbrokes and Gala Coral, as well as Paddy Power and Betfair. About $14 billion has been splurged on betting-company takeovers in the past two years, according to data compiled by Bloomberg, more than in the previous three years combined.
The transaction “would create the largest global online gaming business,” James Wheatcroft, an analyst at Deutsche Bank, said in a note. “We think the deal could lead to significant cost savings,” estimated at about 100 million pounds.
GVC Holdings, said by Reuters to also be interested in Amaya, isn’t involved, according to a person familiar with the matter. A GVC spokeswoman declined to comment.
The discussions between William Hill and Amaya concern a potential merger of equals, the companies said in a joint statement after markets closed Friday.
Amaya’s market value of C$3.4 billion ($2.6 billion) is smaller than William Hill’s, though the Canadian company has more debt. A combination of the two would represent a reverse takeover of Amaya by the British bookmaker, according to analyst David Jennings at Davy.
Amaya Chief Executive Officer Rafi Ashkenazi would probably become head of the combined business, with William Hill’s Philip Bowcock the most likely candidate to be chief financial officer, Jennings said in a note. Bowcock took over as interim CEO of the U.K. company earlier this year, after William Hill ousted James Henderson from the role.
A merger would conclude a roller-coaster year for both companies. William Hill recently staved off a takeover by smaller rivals 888 Holdings Plc and Rank Group Plc, and is seeking a new CEO after ousting Henderson. Amaya has faced the possibility of being taken private by former CEO David Baazov.
For William Hill, combining with Amaya wouldn’t resolve challenges such as boosting the executive team and upgrading its online platform, said Peel Hunt analyst Ivor Jones. The company cut profit guidance in March after new rules made it easier for online gamblers to take a breather from their wagers.
William Hill’s bonds fell on Monday by the most since June 24 when the U.K.’s Brexit vote shocked credit markets. The company’s 350 million pounds of bonds due in 2023 dropped 2 pence on the pound to 102 pence, while its 375 million pounds of notes maturing in 2020 also fell 2 pence to 103 pence, according to data compiled by Bloomberg.
Amaya became the world’s biggest online gambling company when it bought poker sites PokerStars and Full Tilt for $4.9 billion in 2014. Since then, it’s faced the ups and downs of changing regulation in the U.S. and the encroaching uncertainty of an insider trading probe.
Baazov stepped down earlier this year amid the investigation and pledged to try to take the company private himself. In February, Amaya said it had received a non-binding indication from its former boss that he was in discussions with investors to make an offer for the company valued at around C$2.8 billion, or C$21 a share.