What does Caesar’s Buyout mean for William Hill?


William Hill is a British-based bookmaker which has been operating since 1934. Combining high street premises with a strong online presence, the company has grown to be a worldwide leader in betting and gambling. In 2012 they launched William Hill US in partnership with Caesars Entertainment, the corporation who own Caesar’s Palace casino in Las Vegas, Nevada. Although it is marketed under the Caesars brand, all the industry knowledge and website operation come from William Hill. The American side of the business was so successful that it is now the largest sports betting business in the US. That kind of success was bound to attract a lot of attention, and this year the board of William Hill found themselves in receipt of not just one huge buyout offer, but two.

On the 27th of August 2020, Apollo Management International, a private equity firm, submitted a written proposal to purchase the company. This was quickly followed by a proposal from Caesars Entertainment, who already own a 20% stake in William Hill due to their American partnership. After much negotiation, the bosses of William Hill decided to take Caesar’s Entertainment up on their offer and sell them the rest of the business. Now, after the £2.9 billion takeover, what does this mean for the company?

William Hill US is going from strength to strength, due in no small part to its parent company’s expertise in the sports betting market. With legal sports betting, especially online, being a completely new concept in America, having a brand that really knows the ins and outs of the industry has been instrumental in helping Caesars Entertainment to gain an advantage over the competition. The sports betting market there is growing exponentially, with more states legalising the activity and looking for existing, well-run businesses, to operate within their boundaries.

By contrast, although the company started in the UK, its prospects there have not been looking so good of recent. The online market is becoming increasingly saturated and it’s becoming tougher and tougher for businesses to come out on top. The coronavirus pandemic saw all sport put on hold at what would normally be the height of the season, and the sports betting industry took a huge hit as a result. After the enforced shutdown of all non-essential businesses, William Hill took the difficult decisions not to reopen 119 of its high street stores and to merge its online operations with its retail side, as a way to streamline operations and reduce overheads.

Caesar’s Entertainment have already expressed their desire to concentrate solely on the US market. While they don’t want to just end William Hill’s operations in the UK and Europe, the feel that they have no interest or knowledge to develop them further, and so they are going to be looking for buyers to take over the high street shops. With the US market expanding, William Hill are one of the few firms operating out there with any experience of the market, and that should be enough to see the business grow, without having to worry about that success potentially offsetting issues elsewhere. Unfortunately this doesn’t help the thousands of UK employees who are still facing uncertainty over how long their jobs will exist.

Because William Hill is a publically traded company, there are many shareholders who will need to approve the takeover deal before it becomes a certain thing. A minimum of 75% of the shareholders must agree to sell for the deal to be passed, and that is why one of the hotly negotiated parts of the deal has been the price per share that Caesars Entertainment will pay. The final figure decided upon was 272 pence per share, which is higher than the shares achieved at any other point this year.

The buyout seems to have come at just the right time for William Hill, as it gives the company a chance to refocus its efforts clearly on the US market, at a time when the global economy is in a giant state of flux. Without the partnership of Caesars Entertainment, a very famous name in America, there would be very little chance of William Hill making waves without pushing an expensive marketing and advertising campaign to get the name out there. A well-known brand often counts for much more than decades of experience, and the combination of both has so far proved unstoppable. The sports betting industry has picked up again since the resumption of global sporting events, but it has not yet reached the same heights of profit as last year: too many people are suffering from financial issues and having to prioritise spending, and sports betting will never be one of the necessary expenditures. The UK market will continue, but it looks like William Hill, a popular part of UK history since 1934, will no longer be a part of it.