Playtech Ltd (LON: PTEC) sells its 29% stake in William Hill Online to William Hill plc (LON: WMH)
The shares of William Hill (LSE: WMH) climbed 19p, or 5%, to 423p during early London trade this morning after the bookmaker said it would pay £424m to Playtech (LSE: PTEC) for the latter's 29% stake in William Hill Online.
William Hill said the deal would be funded mostly by a £375m fully underwritten rights issue and would give the company full ownership of the online sports-betting, casino, poker and bingo service.
William Hill also claimed the purchase would provide the group with an opportunity to fully develop William Hill Online's future growth potential by further enhancing its products and website.
Playtech's shares fell 14p, or 2%, to 558p following the announcement.
Ralph Topping, William Hill's chief executive, said:
"Having been advised of the valuation of Playtech's 29% interest, the Board has concluded that it is in the best interests of our shareholders to exercise our call option to assume full ownership of this attractive, high growth, high performing business."
Mor Weizer, Playtech's chief executive, said:
"William Hill Online has been an overwhelming success and has delivered a cash return to Playtech greater than 3.5 times its original investment, excluding software royalties in the four years since inception."
William Hill Online was formed during December 2008 when Playtech placed assets then worth €178m into William Hill's existing interactive operations. By the end of 2012, Playtech's total share of profits from William Hill Online, excluding software royalties, has been approximately €140m.
Today's deal with Playtech accompanied William Hill's full-year results, which showed sales up 12% to £1.3bn and profits up 22% to £293m.
William Hill also raised its annual dividend by 17% to 11.2p per share.
Based on today's results, William Hill is valued at 14 times earnings and offers a possible 2.6% dividend income.
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> Maynard does not own any share mentioned in this article.