18th Oct 2016 08:13
LONDON (Alliance News) - Bookmaker William Hill PLC pulled out of talks to merge with Canada's Amaya Inc on Tuesday, leaving the group focused on its internal initiatives following shareholder opposition to the proposed tie-up.
Shares in William Hill were up 2.6% on Tuesday morning at 312.70 pence, among the best performers in the FTSE 250.
William Hill earlier this month said it was in talks with Amaya, which owns the Pokerstars online poker business, about an all-share merger which would have created an online and high-street betting company with a market capitalisation of around GBP4.60 billion.
Merger and acquisition activity has been rife in the UK gambling sector in the past year. Paddy Power and Betfair merged at the beginning of 2016 to create the biggest bookie in the UK by market capitalisation and the only FTSE 100-listed stock in the sector. This was closely followed by the reverse takeover of online betting firm Bwin.Party Digital Entertainment by smaller peer GVC Holdings PLC, which is now a FTSE 250 constituent.
For William Hill, the most notable of the couplings in the sector is that of Ladbrokes PLC and Gala Coral Group Ltd, two of William Hill's main rivals on UK high streets.
On Monday, Ladbrokes and Gala Coral agreed to sell off 359 betting shops in the UK to assuage competition concerns about the deal, leaving the pair with a clear road to getting the merger completed. When they do, the combined Ladbrokes-Coral business will leapfrog William Hill to have the most high-street betting shops in the UK.
This chase for scale has left William Hill on the kerbside. At the beginning of 2015, it tried and failed to buy online gambling firm 888 Holdings PLC due to opposition from a key 888 shareholder. This was turned on its head in August when 888, in partnership with casinos and bingo halls operator Rank Group PLC, teamed up to try to buy William Hill. William Hill rejected the bid as undervaluing the company.
The merger with Amaya met with a similarly cool reception. Parvus Asset Management, which has a 14.3% stake in William Hill, came out publicly against the deal and instead suggested William Hill should consider putting itself up for sale. Parvus said the combination with Amaya had "limited strategic logic and would destroy shareholder value".
On Tuesday, William Hill said that, after "canvassing views" from a number of shareholders, it had decided against pursuing the merger with Amaya. It said it has informed Amaya it will withdraw from the talks.
William Hill said Tuesday it will focus on its internal priorities, including growing its online gambling business, boosting its technology platform, finding efficiencies in the business and increasing its international presence.
It said it will continue to "consider strategic alternatives" in addition to these priorities but made no other comment about a possible sale of the company.
Trading has continued to be positive in the second half of 2016, William Hill said, and operating profit for the full year is expected to be at the upper end of its guidance of GBP260.0 million to GBP280.0 million.
William Hill added that it will restart its share buyback programme, which was suspended following a profit warning by the group in July.
It will issue another trading update on November 14.
By Sam Unsted; [email protected]; @SamUAtAlliance
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