888 Holdings Revises William Hill Pact with Caesars, Looks for More Funds

Posted on: April 7, 2022, 05:31h. 

Last updated on: April 7, 2022, 09:34h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

888 Holdings is ready to take its planned acquisition of sports betting operator William Hill to the next step. To do that, it’s going to need some financial help, and announced a major equity deal beginning this week.

William Hill
William Hill in the UK will soon belong to 888 Holdings. 888 reworked its deal with Caesars Entertainment for the assets, and expects to close the purchase by June. (Image: The Guardian)

888 Holdings already has a solid position in the global gaming market, with operations spanning almost every continent. It’s going to get even bigger once it can complete its acquisition of William Hill’s non-US assets.

The company hopes to complete the process sometime during the second quarter of this year, a slight delay to its previous plans. However, it won’t be able to do it alone, despite reworking the purchase price, and is going to start calling on financial backers today.

888 Needs More Funds

888 had a banner year last year, increasing sales by 14% over its 2020 performance. However, the bottom line fell, which spooked investors. In order to cover the $3 billion it agreed to pay William Hill to acquire the company’s assets, 888 will look for new ways to raise equity, according to Sky News.

The company’s stock has slipped recently. After the company announced its latest financial status about a month ago, showing a drop in revenue, its stock began to decline. Russia’s invasion of Ukraine hindered its trading stability as well. As a result, 888’s stock is about 34% lower than it was when it first announced the planned purchase last September.

888’s financial wizards, in determining how to fund the William Hill acquisition, partially banked the purchase on the company’s stock price. Previously, 888 knew it would need to raise around £500 million (US$654.8 million).

Since the stock has fallen, 888 needs to find a way to make up the difference. As a result, it will present an accelerated bookbuild that covers around 19% of its issued share capital. In addition to seeking new equity options, it will suspend dividends in order to lessen the impact of the acquisition.

Some 70.8 million new ordinary shares will be available through the bookbuild, a common exercise by companies looking to pick up some quick cash. In 888’s current case, the bookbuild replaces its planned capital raise that it previously was going to launch to fund the acquisition.

888 and Caesars Negotiate New Terms

There was a little bit of good news out of the company. It announced that it revised its agreement with William Hill owner Caesars Entertainment. It will now pay between US$2.55 billion and US$2.68 billion, which will change how much it needs to secure through additional financing options. That made investors happy, with the company’s share price immediately jumping 22% during early morning trading.

The rebound will prove beneficial when 888 and Caesars are ready to sign the final documents. The bookbuild should raise around US$177.9 million, based on the company’s closing share price from yesterday. Add to that the additional strength the stock is already seeing, and the company has a little more flexibility.

Also when that time comes, 888 will have to pay US$765.22 million. That is less than the US$1.09 billion the two companies initially agreed to.

In addition, the two companies agreed to a US$130.8-million deferred consideration, payable in 2024. That payment, at 888’s discretion, could be through cash or additional 888 shares. That is contingent on 888 meeting certain financial targets in 2023.

888 shareholders will be able to vote on the acquisition at a general meeting next month. If successful, the company hopes to close the deal sometime in June.