William Hill Couldn't Muster Shareholder Support For the Merger Deal With Amaya

William Hill Walks Away From Merger Talks With Amaya Following Staunch Opposition From Shareholders

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The possibility of a merger between Amaya and William Hill has disappeared as both company boards of directors issued statements explaining that the deal is off.

  • The Amaya statement is here.
  • The William Hill statement is here.

Amaya’s Special Committee has concluded its strategic alternatives review with a recommendation that “remaining as an independent publicly-traded corporation best positions Amaya to deliver long-term shareholder value.”

The board has accepted that recommendation which means that there is no other buyer or strategic partner waiting in the wings. Rumors that partypoker owner GVC, or other private equity bidders may be interested in a bid for Amaya can now be put to rest.

Divyesh (Dave) Gadhia, chairman of Amaya, commented:

“Together with our financial advisors, we evaluated a wide range of strategic alternatives to maximize shareholder value and have concluded that remaining an independent company is in the best interest of Amaya’s shareholders at this time. The Board has full faith in Amaya’s management to execute on its strategy and objectives.”

The declaration comes even though Amaya’s founder and former chairman, president and CEO, David Baazov has informed the board “that he continues to be interested in acquiring all of the outstanding shares of Amaya.”

The regulatory news statement said that:

“The Special Committee has not received an offer from Mr. Baazov that it or its advisors believes is capable of resulting in a completed transaction. Accordingly, while the Board will consider any bona fide offer that Mr. Baazov or any other party may make, Amaya’s review of strategic alternatives has concluded.”

Amaya supports statement with early results for Q3 and full year guidance

The end of the deal with William Hill produced an unsurprising fall in Amaya’s stock price which was down over 8 percent in early trading.

In anticipation, Amaya released its Preliminary Third Quarter Results And Full Year 2016 Guidance.

  • Q3 revenues are expected to be between $268 to $273 million, at least 8.5 percent up on the same period in 2015.
  • Casino and sportsbook revenues are expected to account for 24 percent of total revenues, compared to 15 percent last year.
  • Quarterly Real-Money Active Uniques (QAUs) should be around 2.4 million, a 5 percent increase year-on-year. Poker QAUs are expected to be up by 3 percent.
  • QAUs for online casino are approximately 490,000, with 230,000 for the sportsbook.
  • Full year guidance estimates revenues of $1,127 to $1,157 million and adjusted net earnings of $332 to $352 million.

CEO Rafi Ashkenazi said:

“We anticipate our third quarter performance will continue to demonstrate the improving strength of PokerStars’ core poker business, as well as continued growth in our new verticals of online casino and sports betting.”

He added that the company’s priorities remain the same:

  1. grow leadership position in online poker
  2. become a leader in online casino
  3. build a competitive online sportsbook
  4. achieve operational excellence by improving efficiency and effectiveness throughout the organization

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William Hill couldn’t get shareholder approval for the merger

William Hill’s statement explained the key reason why the merger will not go ahead:

“After canvassing views from a number of William Hill’s major shareholders, the Board has decided that it will not pursue discussions with Amaya. Accordingly, the Board has informed Amaya that it is withdrawing from discussions and wishes Amaya well for the future.”

Last week, William Hill’s largest shareholder, Parvus Asset Management, wrote a letter to the William Hill board saying that it would oppose the deal as the result of its “limited strategic logic”.

Co-Founder of Parvus, Mads Eg Gensmann told Reuters:

“It shouldn’t take more than five minutes of the board’s time to realize this deal doesn’t pass the smell test.”

Parvus owns 14.3 percent of William Hill and was obviously unimpressed with the board’s statement that:

“The potential merger would be consistent with the strategic objectives of both William Hill and Amaya and would create a clear international leader across online sports betting, poker and casino.”

William Hill’s share price remained stable following the news suggesting that investors are content with the decision to withdraw from the deal.

William Hill has recently rejected a takeover offer from Rank and 888 that valued the shares at 394p ($4.81).

The merger proposal valued William Hill’s shares at just 295p ($3.60) a share. To make up the difference the merger would have needed to grow the combined company rapidly by over 33 percent.

In a merger, shareholders don’t get the big pay-off as they would in a leveraged buy-out so they judge the value of the deal based on the increased potential for growth that will arise.

In this case, they didn’t buy the story.

- A former founder of Poker Industry Pro and Head of Content at PokerNews publisher iBus Media, Joss Wood is a graduate in English from the University of Birmingham. Joss also holds a master’s degree in Organisational Development from the University of Manchester. His career path has taken him from the British Army, through business and finance to seven years as a successful professional poker player.
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