Las Vegas casino operator Caesars Entertainment Inc (NASDAQ:CZR) has confirmed its possible takeover approach for UK bookie William Hill PLC (LON:WMH) with a £2.9bn cash proposal, pitched at 272p per share.
William Hill and Caesars are already partners in the United States and recently the UK group was included into a tie-up between Caesars and ESPN.
News of the possible offer price hit the brakes on Friday’s rampant trading in William Hill shares following an announcement that two approaches have been received, one from Caesars and one from Apollo Management International.
Caesars’ US joint venture with William Hill is a potential roadblock to any further approach from Apollo, as the casino group has stated that it would cancel the partnership (under existing rights under the partnership agreement) if Apollo were to acquire the company.
William Hill shares fell 39.2p or 12.5% in Monday’s early deals, to change hands at 273.10p.
Caesars indicative offer price is marked at a 57% premium to William Hill’s closing share price on September 1, which it notes was the last business day prior to Caesars offer.
The casino operator also noted that the 272p offer would be some 80% above William Hill’s volume-weighted average price up to Thursday – before speculation over a possible bidding war emerged – and 112.5% above June’s equity cash call (when £224mln was raised at 128p).
Moreover, Caesars said that William Hill’s board indicated that the approach is priced at a level at which “they would be minded to recommend it to William Hill shareholders.”
Caesars noted that it has finalised due diligence and a further announcement will be made as and when appropriate. If it proceeds to a transaction, the US firm expects it will close in the second half of 2021.
Tom Reeg, Caesars chief executive, in a statement said: "The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect.
“William Hill's sports betting expertise will complement Caesars' current offering, enabling the combined group to better serve our customers in the fast growing US sports betting and online market.
Reeg added: “We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment."