William Hill seeking to diversify further outside of the UK

William Hill Eying Up Diversification With $309 Million Bid For Mr Green

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The spate of gambling industry mergers and acquisitions is unrelenting. This week, William Hill offered $309 million to buy Mr Green & Co (MRG) in a bid to transition into a multi-brand, omni-vertical gambling company.

William Hill CEO Philip Bowcock explained the prospects:

“This proposed acquisition accelerates the diversification of William Hill – immediately making us a more digital and more international business. MRG will provide William Hill with an international hub in Malta with market entry expertise and strong growth momentum in a number of European countries. William Hill will move from a single brand to a suite of brands that can maximise growth opportunities moving forward in new and existing markets.”

MRG is a public company based in Sweden and listed on the Nasdaq Stockholm exchange. It offers online casino, sports betting, bingo and Keno across 13 different markets through its Mr Green and RedBet brands, holding licenses in the UK, Malta, Ireland, Latvia and Italy.

What does Mr Green offer William Hill?

The William Hill press statement sets out a handful of specific advantages that the deal would bring:

  • International growth: MRG’s gaming hub in Malta would help William Hill expand beyond its Gibraltar base. This could be particularly important in the post-BREXIT environment.
  • Improvement to revenue mix: The deal reduces William Hill’s exposure to the UK market. The combined group’s revenues from international operations would increase from 14 percent to 21 percent.
  • Brand(s): The addition of the Mr Green and RedBet brands would “enable the Group to pursue a multi-brand strategy in territories where it is strategically beneficial to do so.”
  • Growth potential: MRG has seen compound annual growth of 23 percent from financial year 2015 to 2017.

Here’s more from that announcement:

The combination of William Hill and MRG will create a strongly positioned combined business with an expanded pan-European footprint in faster growing online betting and gaming markets, further supported by the existing William Hill Online and Retail businesses in the UK and the US.

Here is MRG’s statement on the proposed acquisition.

William Hill offers a pretty penny

William Hill has offered a premium to MRG’s last trading share price of 48.5 SEK. A hefty premium, too, with a $309 million valuation. The deal is an all-cash offer, so current shareholders aren’t being offered a stake in the new group.

The MRG board, representing about 40 percent of the total equity, is recommending the offer to shareholders. At that price, it’s no surprise. Around 90 percent need to agree for the acquisition to to move forward.

Those commitments include that of Henrik Bergquist, one of the three founders of MRG. His and the others are binding unless the board receives a competing offer that is at least eight percent higher than William Hill’s.

Approval will be in the hands of the remaining shareholders in early December and expire on January 11, subject to any extensions. Mr Green stock was hovering up around 69.5 SEK at the time of writing.

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William Hill open to more acquisitions

The widespread introduction of national online gambling regulation has sounded the death knell for small, independent operators in the UK. Scale is now critically important to keep marketing and regulatory costs from becoming overwhelming.

The Stars Group’s recently approved merger with Sky Betting and Gaming is a good example.  Paddy Power and Betfair are now one company, and GVC has risen from almost nowhere to become a gaming behemoth.

Lest we forget, PokerStars nearly merged with William Hill a year and a half ago before shareholders rebelled against the deal. And shortly before that, William Hill was itself the subject of a takeover approach by 888 and the Rank Group. That deal also fell through.

The acquisition of Mr Green would help diversify the William Hill portfolio and give it greater scale, but it may not be enough to satisfy Bowcock. His company has been hard at work, building an undeniably strong footprint in the US market under deals with IGT, Eldorado Resorts and a pair of NHL franchises.

But a truly monster acquisition/merger has been elusive so far.

- 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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