“Transformational acquisition creating a global leader with significant scale in the fast-growing online sports betting and gaming industry.” That’s how the latest news from 888 Holdings (LSE: 888) was announced Thursday.
The acquisition will see 888 buying up William Hill International’s European business. The purchase, from current owner Caesars Entertainment, is at an enterprise value of £2.2bn. Caesars had made it clear when it bought William Hill in April that it only wanted the firm’s US operations.
Chief executive of 888 Holdings, Itai Pazner, said: “This transaction will create one of the world’s leading online betting and gaming groups with superior scale, exceptional brands, increased diversification, and a platform for strong growth.”
The combined group will have more than 12,000 employees. The merger is expected to achieve cost-saving synergies of at least £100m per year by 2025. As well as any direct financial benefits, 888 also sees the William Hill high street brand in the UK as a valuable asset.
888 Holdings’ financing
The deal will be funded initially by £2.1bn of new debt financing, which has already been secured. But 888 also intends to raise approximately £500m by issuing new equity “at an appropriate time“. The company has set a medium-term target for its net-debt-to-EBITDA ratio of below three times.
The deal will still need shareholders’ approval. And it is in a regulated industry, so it also needs to get nod from the Financial Conduct Authority. Gauging the market’s reaction so far is tricky, with the 888 Holdings share price down 2.8% by mid-afternoon Thursday. But it was a day of falling markets anyway.
