William Hill and partner GVC Holdings up the stakes in their takeover of Sportingbet

This morning William Hill and GVC Holdings announced they have reached agreement with the board of Sportingbet as the result of an increase in the indicative offer they have made for the company. On the 1st October the two firms offered Sportingbet 52.5p per item of stock, which has now been increased to a headline price of 61.1p per share (to take the form of cash, new GVC stock in return for Sportingbet shares and a cash dividend per share).

Based on Sportingbet’s closing share price on the 15th October, this would value the company at around GBP 407 million. Taken at face value, this deal would appear to be about increasing William Hill’s market share in the UK, but it also throws up some intriguing questions. For example, why have William Hill involved a partner in the transaction, and is the deal more about accessing international unregulated gambling markets, as opposed to being focused solely on the UK market?

Sportingbet was the subject of interest from Ladbrokes in the summer of 2011, according to press speculation. The company even went so far as to release a stock exchange announcement stating they had withdrawn from the discussions, and Ladbrokes cited issues around creating shareholder value within an acceptable regulatory framework.

So, in partnering with GVC Holdings have William Hill and its advisors come up with a clever way of structuring the deal so that both the regulators and the shareholders can be happy? This could be one angle. The other being that in 2011, Sportingbet completed the acquisition of Centrebet, thereby giving the company access to the growing Australian market and accelerating the group’s strategy of increasing its exposure to regulated markets. In turn this would help William Hill, should the deal go ahead.

I have a feeling that all the runners and riders have not yet shown their hands in relation to Sportingbet.

Filed under: gambling, online, UK, dealmaking