7th Apr 2022 10:29
(Alliance News) - Peel Hunt took a positive view on 888 Holdings PLC's move to acquire the non-US assets of William Hill, saying the benefits have the potential to transform the gambling firm.
888 confirmed on Thursday said it will conduct an accelerated bookbuild to fund the acquisition of William Hill's non-US operations, also adding the purchase price of the deal has been cut.
The Gibraltar-based company said it will conduct a non-pre-emptive placing of up to 70.8 million new ordinary shares to start immediately. The placing price for the shares will be determined after the process closes, 888 explained. The new shares represent around 19% of its issued capital.
Shares in 888 soared by 23% to 237.00 pence each in London on Thursday morning, the best FTSE 250 performer.
At current market prices, the fundraise will be worth around GBP167.8 million.
888 said the placing replaces its previous intention to raise around GBP500 million in the issue of new equity. An accelerated bookbuild is a quicker option to raise the necessary funds for the acquisition of William Hill assets, 888 explained.
William Hill International is a retail and online betting brand, now owned by Caesars Entertainment Inc after a buyout of the former London listing. 888 is acquiring the non-US assets from Caesars.
888 also announced the enterprise value of William Hill assets has been revised downwards to GBP1.95 billion to GBP2.05 billion from GBP2.2 billion previously.
888 and Caesars have amended their September purchase deal, with the cash consideration due at closing reduced to GBP584.9 million from GBP834.9 million before.
Peel Hunt's Ivor Jones said the acquisition of the William Hill assets will transform 888 in terms of scale and relevance to investors.
"888 has chipped the price it will pay for William Hill and reduced the initial cash consideration required, such that the equity issue is reduced in scale to a placing. We are positive about the potential benefits of this transformation of 888 and management’s ability to realise those benefits," the analyst said.
Jones also said the 888's management will "excel" at overcoming the challenges of integrating the businesses.
"[The deal] also gives management a multi-year runway of synergy extraction and business optimisation to drive growth,and the retail business in the UK will provide additional cash to drive down the initial spike in debt," Jones added.
By Arvind Bhunjun; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
888.L