William Hill Abandons Amaya Merger Talks on Investor Dissent

  • Parvus co-founder Gensmann ‘pleased’ deal has fallen apart
  • Deal would have formed world’s largest online gambling company

William Hill Plc and PokerStars owner Amaya Inc. of Canada ended merger discussions, squelching one of the biggest possible deals in the betting industry after U.K. activist investor Parvus Asset Management opposed the union.

William Hill will continue to consider strategic alternatives, the London-based company said Tuesday. In a separate statement, Amaya said its board concluded that remaining an independent publicly-traded corporation best positions it to deliver long-term value. Parvus, which holds an economic interest in about 14 percent of William Hill’s equity, said it was pleased by the decision after coming out against the deal last week.

Amaya fell 6.8 percent to C$18.95 at 10:28 a.m. in Toronto. William Hill rose 0.3 percent to 305.8 pence at 3:31 p.m. in London. Before today, Will Hill had fallen 23 percent this year, giving the company a market value of 2.65 billion pounds ($3.2 billion).

The retreat marks a victory for Parvus as well as a pause in the spate of deals in the gambling industry that has included the combination of Ladbrokes and Gala Coral, as well as Paddy Power and Betfair. Betting-company takeovers have totaled about $14 billion in the past two years, according to data compiled by Bloomberg, more than in the previous three years combined.

“It would have been a very complex transaction for William Hill given they don’t have a permanent CEO in place and are in the middle of turning around their online business," Jeffrey Harwood, an analyst at Stifel Nicolaus & Co., said by phone.

‘Clearly Pleased’

Parvus co-founder Mads Gensmann said he was “clearly pleased” by the decision, and is now looking forward “to working constructively with the board to create value for all shareholders of William Hill.”

“After canvassing views from a number of William Hill’s major shareholders, the board has decided that it will not pursue discussions with Amaya,” the U.K. company said in the statement.

Baazov’s Bid

Amaya’s former Chief Executive Officer David Baazov is still interested in taking the company private, Pointe Claire, Quebec-based Amaya said in the statement, although the board said it has yet to receive an offer from him that it thinks will result in a completed deal. Baazov stepped down from his role this year and in February indicated 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.

The Pointe-Claire, Quebec-based company also said today third quarter revenue would be between $268 million and $273 million, below analyst estimates of $280.9 million. Full-year revenue will be between $1.13 billion and $1.16 billion, compared to the average analyst estimate of of $1.16 billion. Amaya is expected to report full third-quarter earnings on Nov. 14.

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.

William Hill and Amaya said Oct. 10 that they were discussing a potential merger of equals in a transaction that would have created the largest global online gaming business, according to James Wheatcroft, an analyst at Deutsche Bank.

The U.K. company recently staved off a takeover by smaller rivals 888 Holdings Plc and Rank Group Plc, and is seeking a new CEO after ousting James Henderson.

Parvus led the opposition to a 5.2 billion-pound bid from G4S for the Danish catering services group ISS in 2011, calling it an “untested vision.” But it isn’t always an opponent of such major deals, backing Paddy Power’s merger with Betfair as its largest shareholder.

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