Betfred Founder Done Considering Competing Offer for William Hill

Posted on: October 4, 2020, 01:14h. 

Last updated on: October 4, 2020, 04:23h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Betfred founder Fred Done is reportedly considering raining on Caesars Entertainment’s (NASDAQ:CZR) parade and making a higher offer for William Hill (OTC:WIMHY).

Fred Done
Betfred founder Fred Done at an awards show in 2019. He’s reportedly considering a bid for William Hill. (Image: The Guardian)

Following a lengthy period of speculation, the Caesars Palace operator last week agreed to acquire William Hill for $3.69 billion in cash, an offer the British bookmaker’s board is recommending investors favor when voting. Done, who’s now the second-largest William Hill shareholder, could make a rival bid, perhaps inspired by Caesars plans to jettison the UK-based company’s European operations.

He began stakebuilding in William Hill two years ago, and is understood to have held informal talks over a potential bid for the shops at the end of last year,” reports The Telegraph.

Done, 77, and multiple gaming companies are rumored to be interested in William Hill’s European shops. But, in recent days, the Betfred founder reportedly mulled making a run at the entirety of William Hill. 888 Holdings is among the operators that are believed to be interested in William Hill’s European unit.

Details Still Sparse, But There’s Wiggle Room

Exactly how much Done would offer for William Hill isn’t yet clear. But there’s room for him to compel the sportsbook operator to at least consider his bid.

Some analysts and investors are disappointed that William Hill is accepting Caesars’ $3.69 billion, arguing that it undervalues the company and that’s below the $3.80 billion the older version of the Harrah’s operator reportedly offered for William Hill last year.

Caesars has leverage over William Hill in this situation. The casino giant owns 20 percent of the bookmaker’s US business, which is considered the crown jewel in this transaction because of the rapid growth of sports betting here. The gaming company essentially told the sportsbook operator that if it accepts a rival offer, its US relationship with Caesars will be terminated.

That doesn’t mean Done or any other potential buyer doesn’t have cards to play. Analysts estimate William Hill’s European operations alone are worth $2 billion to $4.5 billion, confirming the notion that Caesars may not be offering enough for the sportsbook firm.

Good Deal for Caesars, as it Stands

Assuming Caesars wins William Hill, analysts see a steal in the making for the Flaming operator. In a note to clients last week, Roth Capital analyst David Bain estimates the combined Caesars/William US unit is worth $120 a share, valuing the casino company’s land-based operations at $55 a share and its interactive business at $65. The stock closed just under $57 last Friday.

As for Done, hope isn’t lost. But if he wants William Hill, it could take a sizable premium to the $3.69 billion Caesars is offering.

Caesars is reportedly promising mass layoffs at William Hill’s European betting shops. With the latter’s board recommending the bid, Done could be left out in the cold.

However, The Telegraph reports some high-level investors believe the competition for William Hill is far from over. Some hedge funds with stakes in the company could be shopping for higher bids to run the stock price up, adding value to their investments.