Despite the presence of private equity giant Apollo Global Management in the bidding battle for ownership of sports betting conglomerate William Hill, analysts handicapped Caesars Entertainment as the leading buyer in a deal valued at $3.7 billion.
The casino giant confirmed its interest Monday in acquiring United Kingdom-based William Hill, the parent of William Hill US, one of the nation’s leading sports betting operators with businesses in more than 170 retail locations across 13 states and an estimated 29% market share.
Apollo once jointly owned Caesars in the late 2000s with fellow private equity firm TPG Capital before losing much of the equity during the company’s 2016 bankruptcy reorganization. The firms sold their remaining equity in 2019.
Apollo has not confirmed its bid, however, William Hill officials told financial media in London it was considering an Apollo offer and has until Oct. 23 to reach an agreement.
Caesars owns 20% of William Hill, which would seem to tip the transaction its way. Caesars has 55 gaming properties in 16 states and William Hill has opened 12 branded sportsbooks at Caesars’ properties in Nevada, Iowa, and New Jersey.
Pending regulatory approval, the remaining sportsbooks across the Caesars portfolio will be rebranded. The mobile sports betting app, Caesars Sports Book by William Hill, will soon be available in Indiana, Pennsylvania, New Jersey, and Nevada, pending regulatory approvals.
Morgan Stanley gaming analyst Thomas Allen said Caesars could terminate the joint venture with William Hill US if Apollo were to acquire the parent company.
Roth Capital Partners gaming analyst David Bain said his understanding is that Apollo is included on a list of restricted potential buyers for William Hill.
“As such, should William Hill sell itself to Apollo, we believe Caesars could ‘walk away’ from the William Hill US relationship, no doubt a significant factor in Apollo’s perceived value of William Hill, in our view,” Bain said.
Shares of Caesars rose 2% Monday on the Nasdaq, to close at $58.21.
Following the $17.3 billion merger between Caesars and Reno-based Eldorado Resorts – with Eldorado management assuming control of the combined company and assuming the Caesars name and stock, William Hill US expanded its Caesars presence. The company assumed the operations of two Caesars sportsbooks in Lake Tahoe and nine on or near the Strip, including the iconic sportsbook at Caesars Palace.
Earlier this month, Caesars CEO Tom Reeg told CNBC sports betting legalization is one of the biggest growth opportunities for the gaming industry in more than two decades.
On Monday, Caesars commenced a stock offering of 30 million shares with the proceeds targeted toward a potential purchase of William Hill.
William Hill’s board, according to Reuters, was inclined to recommend a Caesars offer to shareholders.
In a filing with the Securities and Exchange Commission associated with the stock offering, Caesars said it would seek to obtain $2 billion in new debt that would be secured by William Hill’s non-U.S. businesses.
In the SEC filing, Caesars said the company’s focus would remain on the U.S. opportunities for sports betting and online gaming. The company said it would “to seek suitable partners or owners” for William Hill’s “presence in the UK and other non-US international markets.”
Most of William Hill’s sportsbooks are not associated with Caesars.
Through the company’s purchase of Las Vegas-based CG Technologies in August, William Hill acquired the contracts to manage sports betting operations at the Venetian Las Vegas, the Palazzo, Tropicana Las Vegas, Cosmopolitan of Las Vegas, Palms, and Silverton. All are located on or near the Strip. William Hill also manages the sports betting operations for five downtown Las Vegas resorts: The Strat, the Downtown Grand, Binion’s, the Plaza, and Four Queens.
The company operates retail sportsbooks in Michigan, New Jersey, Indiana, West Virginia, Illinois, Colorado, and Iowa, and is online in Iowa. It is also a licensed sports betting provider in numerous casinos in Mississippi and New Mexico and serves as the exclusive risk manager for the Delaware and Rhode Island sports lotteries.
On August 3, William Hill opened a sportsbook at the Capitol One Arena in Washington D.C. that features wagering kiosks.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
