Sportingbet Closes Deal with Will Hill and GVC

A report came this week that the acquisition of Sportingbet plc by William Hill plc and GVC plc has finally been agreed, and that the consideration paid for it will amount to GBP 485 million.

The new owners are sure that they'll see a significant boost thanks to Sportingbet's Australian business, and its online operations in Spain. On the other side, GVC will acquire businesses in countries where regulation is less clear cut and investment risks are higher.

As Will Hill CEO Ralph Topping commented on Dec. 21, "We look forward to working with the management and employees of Sportingbet in Australia and Spain to combine our joint experience and expertise to create additional value for our customers and shareholders."

However, the whole deal may run into difficulties with Will Hill's partner Playtech, which reminded that in terms of its participation in the William Hill Online joint venture, William Hill plc is "...bound to conduct its remote gambling business through the William Hill Online business, in which Playtech is a 29 per cent shareholder."

Namely, it was stated by Playtech CEO Mor Weizer, who reminded that William Hill plc had earlier indicated an intention to exercise its option to buy the Playtech stake in WHO, that if the WH/GVC Offer is completed, William Hill will be obliged to offer to sell the remote gambling activities of Sportingbet to William Hill Online within six months of completion of the acquisition…and Playtech has the right, in its absolute discretion, to determine whether William Hill Online accepts such an acquisition.

He further observes in his statement that "Playtech believes that it is likely that the acquisition of the Sportingbet activities would add considerable value to William Hill Online.

"The acquisition would offer a range of potential cost and sales synergies including access to new customers in regulated markets including Sportingbet's established business in Australia, where William Hill Online currently does not have a footprint.

"Playtech expects that the potential contribution of the Sportingbet activities and associated synergies and cost savings will be taken into consideration as part of any valuation of William Hill Online," the statement suggests, adding that Playtech will decide upon the merits of a WHO purchase of Sportingbet activities if and when it is invited to do so.

'Such an acquisition by WHO should take place within three months of any such agreement, and at a price determined on a stand-alone basis for the Sportingbet activities.

'Playtech accepts that it would need to provide its share of the acquisition funding or agree an alternative financing mechanism with William Hill,' he asserted, noting that the William Hill evaluation regarding taking over Playtech's stake in WHO is due to end in late February 2013 and that it is conducted on the basis of the value of William Hill Online as a whole with no discount for minority nor premium for control.

"Following completion of the valuation process, William Hill will have a short period to determine whether it will exercise its option at the value determined by the process and, if it wishes to proceed, must complete the purchase by the end of April 2013, failing which the call option will lapse," he cautioned.

In conclusion, he noted that WHO is a key driver in William Hill plc's remote gaming success, and that Playtech is "....dedicated to maintaining its close working relationship with William Hill to support its continued growth."

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