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William Hill and GVC Close to Sportingbet Deal

It’s taken a few rounds but William Hill and GVC are close to completing a deal for Sportingbet after increasing their offer over the weekend to 61.1 per share.

The Australia-facing operator told the two companies that its board will “unanimously recommend” the £530 million deal.

William Hill and GVC’s first approach was turned down by stakeholders, who thought the initial 52.5 per share offer “significantly undervalued” the business, while a bid of 55 per share was rejected late last week.

The improved offer includes a “mix and match” option, where Sportingbet shareholders may receive proportionately more cash or shares.

William Hill and GVC have been given to November 13 to decide if they will make the offer formal, or walk away from the deal.

The companies cautioned that there is “no certainty that at the end of this period, an offer for Sportingbet will be made, nor as to the terms of any such offer.”

Equity analysts tracking Sportingbet said a formal deal may not be reached by November 13, though the deadline could be further extended.

There is also no exclusivity agreement, which means a competing bid may yet emerge. Ladbrokes, William Hill’s closest rival, was interested but called off talks in October 2011 over regulatory concerns.

Ivor Jones, equity analyst at Numis, said: “We continue to believe that a bidder capable of extracting synergies from Sportingbet’s businesses would be able to pay 90p per share. Sportingbet is now in play and likely to be seeking such a bidder.”

Other analysts, however,  like Panmure Gordon’s Simon French said that a competing offer is unlikely due to the complexity of Sportingbet’s unregulated markets and the board’s support for the improved proposal.

William Hill has been eyeing Sportingbet’s Australian business, which accounts for 90% of its profits. GVC, which last year bought Sportingbet’s Turkish business for £113 million, will pick up the operator’s risky, unregulated assets.

 

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