16th May 2005 07:01
William Hill PLC16 May 2005 16 May 2005 For immediate release William Hill PLC ("William Hill" or the "Company") Proposed £504 million Acquisition of Stanley Leisure plc's ("Stanley Leisure") Retail Bookmaking Operations and William Hill Current Trading Update Summary The boards of William Hill and Stanley Leisure have agreed the terms of theproposed acquisition of Stanley Leisure's retail bookmaking operations in GreatBritain, Northern Ireland, the Republic of Ireland, Jersey and the Isle of Man("Stanley's Retail Bookmaking"), for a total cash consideration of £504 million(the "Proposed Acquisition"). Rationale for Acquisition • The Proposed Acquisition represents a rare opportunity for William Hillto increase the scale of its UK retail betting estate, creating the UK's leadingnetwork of LBOs - Addition of 624 Licensed Betting Offices ("LBOs") in Great Britain, NorthernIreland, the Republic of Ireland, Jersey and the Isle of Man - Highly complementary estate, with Stanley's Retail Bookmaking providing apresence in areas in which William Hill is currently relatively underrepresented, such as the north west of England, or unrepresented, such asNorthern Ireland and the Republic of Ireland • The integration of Stanley's Retail Bookmaking under the William Hill brand offers significant scope for synergies and improvement in the profitability of Stanley's Retail Bookmaking estate including from - Re-branding under the William Hill brand, raising the profile of these LBOs on the high street - Introduction of William Hill's full range of product offering, services and risk management systems - Development of additional services and provision of more betting opportunities for LBO customers - Completion of fixed odds betting terminal ("FOBT") roll-out and improvement in mix - Leveraging of investment in new and existing technology - Improved contractual terms due to greater buying leverage • In the year ended 2 May 2004, Stanley's Retail Bookmaking generatedEBITDA (earnings before interest, tax, depreciation and amortisation) of £37.2million although profits are expected to be marginally lower in the year ended 1May 2005 due to the effect of unfavourable horseracing and football results inthe second half of Stanley Leisure's financial year (Note 1) • The Directors expect the Proposed Acquisition to deliver pre-taxsynergies of £13 million in the financial year ending 26 December 2006 and to: - Enhance earnings per share before exceptional items from 2006, the first full financial year following expected completion (Note 2) - Generate returns in excess of William Hill's cost of capital from 2006, the first full financial year following expected completion (Note 2) Competition Considerations William Hill is assuming the UK competition risk in relation to the ProposedAcquisition, which will be subject to review by the OFT. However, the UKbetting market is highly competitive, and accordingly the Board believes thatany potential competition issues will not be material in the overall context ofthe transaction. Proposed Return of Capital In light of the Proposed Acquisition, William Hill will not be proceeding withthe return of capital announced on 2 March 2005. The Directors of William Hillwill review the Company's capital structure with a view to establishing anefficient capital structure for the Group as enlarged by the acquisition ofStanley's Retail Bookmaking and taking into account any LBO disposals required.The Directors will outline their proposals for the Company's capital structure,which may include a combination of one-off returns of capital, share buy-backsand dividends, following completion of the Proposed Acquisition and after thecompetition authorities' review process is complete. Once the Company's capitalstructure review is complete the Board will also propose, for approval byshareholders at the next general meeting after the structure review, a specificrestriction on its borrowing powers for inclusion in the Company's Articles ofAssociation. Shareholder Approval The Proposed Acquisition is conditional upon the approval of William Hill'sshareholders at an Extraordinary General Meeting. It is also subject to theapproval of Stanley Leisure's shareholders. Irrevocable undertakings to vote in favour of the Proposed Acquisition at theExtraordinary General Meeting of Stanley Leisure have been given by StanleyLeisure's non-executive Chairman Lord Steinberg and by Genting International PLCin respect of their holdings of 14,000,000 and 26,187,421 Stanley Leisure sharesrespectively, representing in aggregate approximately 30.9 per cent. of StanleyLeisure's issued share capital. Commenting on the Proposed Acquisition, David Harding, Chief Executive ofWilliam Hill said: "Success in fixed odds betting is increasingly about being able to offer thewidest range of competitively priced betting opportunities to the largest numberof customers. This acquisition represents a rare opportunity for William Hillto substantially increase its distribution reach, whilst simultaneouslyrealising benefits of scale. Having completed our due diligence we are confident that we will achievesubstantial synergies by applying William Hill's systems and approach to theenlarged estate. The Board believes that this acquisition is in the best interests of the companyand offers attractive immediate financial returns as well as fundamentalstrategic benefits not provided by the previously announced return of capital. We will review the capital structure of the enlarged Group and the scope forreturns of capital when the extent of any disposals is clear and integration isunderway." This summary should be read in conjunction with the full text of the followingannouncement. Analysts' Meeting There will be a presentation to analysts at 9.00 a.m. today at the LincolnCentre, 18 Lincoln's Inn Fields, London WC2. Alternatively, it will be possibleto listen to the presentation by dialling +44 (0) 1452 542 400. The presentationwill be recorded and will be available for a period of one week by dialling +44(0) 800 953 1533 and using the replay access number 6265994#. The slidepresentation will be available on the Investor Relations section of the websitewww.williamhillplc.co.uk. Current Trading William Hill has also today provided an update on current trading in advance ofits Annual General Meeting on 19 May 2005. William Hill 2005 Interim Results Announcement Given the timing of the Proposed Acquisition, William Hill will make its 2005Interim Results announcement on 5 September 2005 rather than 2 August 2005 aspreviously indicated. It is the Board's intention to update shareholders on theintegration process at the Interim Results. In addition, William Hill will provide a trading update to the market in July2005 ahead of its close period. Enquiries:William Hill PLC (020) 8918 3910David HardingTom Singer Citigroup (Financial Adviser to William Hill) (020) 7986 4000David WormsleyJan Skarbek Citigroup (Corporate Broker to William Hill) (020) 7986 4000David JamesAndrew Seaton Brunswick Group Limited (020) 7404 5959James Bradley William Cullum Note 1: After adjustment to reflect the application of William Hill's accountingpolicies and the transfer of certain assets held elsewhere in the StanleyLeisure group into Stanley's Retail Bookmaking. Note 2: Nothing in this announcement should be construed as a profit forecast orbe interpreted to mean that the future earnings per share or profits of WilliamHill will necessarily be greater than the historic published earnings per share. Citigroup Global Markets Limited ("Citigroup") is acting for William Hill and no-one else in connection with the matters referred to in this announcement andwill not be responsible to anyone other than William Hill for providing theprotections afforded to clients of Citigroup or for providing advice in relationto these matters. Introduction On 18 April 2005, William Hill announced that it was in exclusive discussionswith Stanley Leisure and conducting an associated due diligence exercise inrelation to the possible acquisition of Stanley's Retail Bookmaking. Today,William Hill announces that it has agreed to acquire Stanley's Retail Bookmakingfor a total consideration of £504 million, payable in cash on completion (the "Proposed Acquisition"). Stanley's Retail Bookmaking comprises 624 LBOs and is the fourth largestoperator of LBOs in the UK. It is also one of the largest operators of LBOs inthe Republic of Ireland. The Proposed Acquisition will create the UK's leadingnetwork of LBOs and significantly enhances the size of William Hill's retailestate enlarging it to 2,237 LBOs from 1,613. The distribution of the Stanley'sRetail Bookmaking estate is highly complementary with William Hill's existingestate, providing a presence in areas in which William Hill is currentlyrelatively under represented such as the north west of England or unrepresentedsuch as Northern Ireland and the Republic of Ireland. The Directors expect the Proposed Acquisition to deliver pre-tax synergies of£13 million in the financial year ending 26 December 2006. This improvement inperformance results from the realisation of operational revenue and costsynergies as well as the full year effect of the roll-out of FOBTs and recentinvestments in the retail estate. In addition, anticipated further de-regulation, product innovation, investmentin new technology and extensive high street distribution are all likely todeliver benefits to the enlarged Group in the medium term. The ProposedAcquisition is consistent with William Hill's strategy since listing which hasbeen aimed at delivering sustainable earnings growth and value for itsshareholders. In view of the size of the Proposed Acquisition it is subject to the approval ofWilliam Hill's shareholders at an Extraordinary General Meeting. The ProposedAcquisition is also subject to the approval of Stanley Leisure's shareholders.The purpose of this announcement is to provide details of the ProposedAcquisition and to explain why the Directors believe it is in the best interestsof William Hill and its shareholders. A circular and formal notice to convenethe Extraordinary General Meeting to seek shareholders' approval for theProposed Acquisition will be posted to shareholders shortly. Background to and Reasons for the Proposed Acquisition Strategy and performance since listing William Hill was listed on the London Stock Exchange in June 2002 and, sincelisting, the Company has pursued a strategy aimed at delivering sustainableearnings growth and value for its shareholders. The key elements of thisstrategy have been to continue to enhance traditional earnings and maximiseorganic growth opportunities, profitably exploit new platforms across allbetting channels (including interactive ("Interactive") channels - the internet,mobile internet and interactive digital television), capitalise on opportunitiesarising from regulatory, fiscal and technological change and selectively pursuevalue-enhancing acquisitions. Although the Company has reviewed a number ofpotential investment and acquisition opportunities, particularly in the contextof potential gambling deregulation in the UK, the Directors of William Hill havemaintained strict financial discipline and avoided pursuing opportunities unlessthey were demonstrably value-enhancing for shareholders. William Hill has grown its profit on ordinary activities after taxation (butbefore exceptional items) by 153 per cent. over the last two financial years.This has mainly been driven by continued capital investment and by takingadvantage of organic growth opportunities, including the introduction of newproducts across its Retail, Telephone and Interactive channels, the successfuldevelopment of FOBTs and extending trading hours in the LBOs, as well as thegeneral growth of business across Interactive channels. During this time, theCompany has also made several small acquisitions of LBOs, which have increasedthe size of William Hill's retail estate, and has also acquired two greyhoundstadia. Consistent with its strategy, William Hill has reviewed, on an on-going basis,opportunities to acquire chains of LBOs which would enhance the overall breadthof William Hill's estate on terms that enhance shareholder value. In theabsence of significant acquisition opportunities, a proposed return of capitalwas announced with William Hill's preliminary results on 2 March 2005, subjectto shareholder approval. Subsequently the opportunity to acquire Stanley'sRetail Bookmaking arose and, on 18 April 2005, William Hill announced that itwas in exclusive discussions with Stanley Leisure about the Proposed Acquisitionand that this potential opportunity would be evaluated before proceeding with areturn of capital. The Directors have concluded that the Proposed Acquisition represents a rarestrategic opportunity for William Hill to increase the scale of its retailbetting estate and benefit from economies of scale. The Directors believesubstantial synergies can be achieved by applying William Hill's systems andapproach to the enlarged estate. The Directors consider the Proposed Acquisition to be in the best interests ofthe Company and its shareholders as a whole and will be recommending that theshareholders of the Company vote in favour of the Proposed Acquisition, as theyintend to do in respect of their own beneficial holdings. Benefits of the Proposed Acquisition Summary William Hill has developed detailed plans for the efficient integration ofStanley's Retail Bookmaking into William Hill. Based on these plans, theDirectors of William Hill believe substantial synergies can be achieved throughthe integration of the businesses and roll-out of the William Hill brand acrossStanley's Retail Bookmaking estate and by applying William Hill's systems andapproach to the enlarged estate. The combination also enables the enlargedbusiness to leverage more effectively existing and future investment anddevelopment opportunities. The Directors expect the Proposed Acquisition to deliver pre-tax synergies of£13 million in the financial year ending 26 December 2006. This improvement inperformance results from the realisation of operational revenue and costsynergies as well as the full year effect of the roll-out of FOBTs and recentinvestments in the retail estate. The Directors estimate that the exceptional costs associated with thetransaction will total £20 million, of which business integration costs amountto £10 million and advisory and other fees comprise £10 million, the majority ofwhich will be incurred in 2005. William Hill intends to invest an estimated £10 million upfront in Stanley'sRetail Bookmaking estate on capital expenditure, principally to harmonise LBObased and back office information systems. In addition it is anticipated thatapproximately £20 million will be spent investing in and upgrading Stanley'sRetail Bookmaking estate over the next three years. Cost savings and economies of scale The Proposed Acquisition provides an immediate opportunity to improve theefficiency of the enlarged business and deliver cost savings through theelimination of duplicate back office functions and line management structures. William Hill intends to re-brand Stanley's Retail Bookmaking estate under theWilliam Hill brand. The Directors believe that this will raise the profile ofacquired LBOs on the high street and of the William Hill brand generally, whilststill allowing for a net reduction in the aggregate expenditure on branding,marketing and sponsorship. In addition, William Hill would reduce the aggregateamount spent on corporate overheads and seek over time to improve commercialterms with suppliers in areas such as the provision of FOBTs and amusement withprizes ("AWP") machines. The Directors of William Hill also believe that there is significant benefit inbeing able to differentiate its service and brand by offering a full range ofbetting and gaming products, widespread distribution, and an integrated serviceoffering that allows customers to bet using a single account across alldistribution channels - Retail, Telephone and Interactive channels, includinginternet, mobile internet and interactive digital television. William Hill is already investing heavily in products and front and back officesystems to ensure that it has an unrivalled capability to deliver thisproposition to customers. The Proposed Acquisition further supports thisstrategy and would enable the enlarged business to leverage more effectivelyexisting and future investment and development opportunities. Revenue opportunities The Board believes that the Proposed Acquisition provides a range ofopportunities to enhance the profitability of Stanley's Retail Bookmaking estateas well as develop new income streams as a result of William Hill having a moreextensive distribution capability through its enlarged network of LBOs. There are a number of immediate opportunities to improve the profitability ofStanley's Retail Bookmaking including: • Improvement in mix between FOBTs and AWPs. Stanley's RetailBookmaking estate in the UK holds approximately 1,364 FOBTs, equivalent to 2.4FOBT machines per LBO. There is scope to increase the number of FOBT machinesacross Stanley's Retail Bookmaking UK estate to around 1,630 through changingthe mix of FOBTs and AWPs in the near term. Over time we also believe there maybe further scope to optimise the number and mix of machines. In addition,William Hill will benefit from the anticipated de-regulation of machine gamingin LBOs through the introduction of Jackpot machines, offering prizes of up to£500, and new products developed for FOBTs, across the enlarged estate. • Introduction of William Hill's product offering to Stanley's RetailBookmaking, which is more comprehensive than that currently on offer in termsof both range of sports, range of bet types and maximum win limits, madepossible by the greater ability to spread risk over a larger range of business,and enhanced liability management due to an on-course presence. • Development of additional services that enhance the service levels andprovide more betting opportunities for the LBO customer such as introducing asecond numbers betting channel to increase betting opportunities and stimulaterecycling. • The anticipated removal of regulations restricting winter LBO openinghours, coupled with increased availability of floodlit horseracing, which willenable William Hill to take further advantage of extended trading hours for bothover the counter and machine business across the enlarged estate. In the medium term, the Board also believes that more extensive high streetdistribution will enhance its ability to: • Leverage investment in new and existing technology within the LBOenvironment such as mark sense betting slips, self service terminals andtailoring of audio visual information and betting opportunities to localgeographic markets. • Better exploit the growing desire amongst some customers for thebenefit of a single account offering across all distribution channels andproducts, by having the largest and most ubiquitous distribution in the UK. Itwould also provide William Hill with an enlarged LBO customer base who may alsowish to use William Hill's leading telephone and interactive offerings,distribution channels in which Stanley Leisure does not have a strong marketposition. • Further enhance the Group's influence in discussions with governmentand the Gambling Commission on the taxation and regulation of the UK market andgambling products. • Be the partner of choice in any cross platform consolidation amongstgaming and betting operators in the UK. • Take advantage of international opportunities which the Directorsbelieve are increasingly likely to arise as other markets, particularly inEurope, begin to deregulate or adapt to respond to the growing challenges totheir, domestic, lottery and pari-mutuel operations from internet fixed oddsbetting and casino products. • In the longer term, potentially challenge direct competitors andincumbents for rights to operate and distribute pari-mutuel and lottery typeproducts as and when monopoly licences expire. LBO profitability The average profitability per LBO within Stanley's Retail Bookmaking issubstantially below that of William Hill's LBOs which is, in part, a result ofStanley's Retail Bookmaking LBOs being on average smaller and less well situatedthan William Hill's LBOs. However, the Directors of William Hill believe thatthrough sustained investment in, and development of, Stanley's Retail Bookmakingit will be possible to improve operating performance and increase market share.William Hill has significant experience of developing LBOs and is confident itcan upgrade and improve the quality and performance of the acquired estate overtime. Integration of Stanley's Retail Bookmaking William Hill has developed a plan for the integration of Stanley's RetailBookmaking into William Hill's existing structure following completion of thetransaction. It intends to spend the first six to eight weeks followingcompletion further analysing Stanley's Retail Bookmaking business to refine thedetails in the plan before commencing integration, subject to appropriateclearance from the OFT. After the initial review, William Hill will begin to rebrand Stanley's RetailBookmaking's LBOs under the William Hill banner, a more recognisable nationalbetting brand. It is anticipated that the rebranding of the LBOs will take aperiod of approximately six months from commencement of the exercise. In conjunction with rebranding, William Hill intends to adapt the service andfacilities in the Stanley's Retail Bookmaking LBOs in order to bring these LBOsinto line with William Hill's existing LBOs. William Hill will also invest inStanley's Retail Bookmaking estate to improve the quality of units throughrefurbishment, re-sites and extensions as local conditions allow. This investment programme will improve the size, appearance and facilitiesoffered in the acquired LBOs, increase the number of machines across Stanley'sRetail Bookmaking estate, and harmonise the in-store technology and serviceoffering. In parallel with the rebranding and refurbishment of LBOs, William Hill intendsto extract benefits from the rationalisation of central functions and removingduplicate line management structures. Competition Regulation William Hill is assuming the UK competition risk in relation to the ProposedAcquisition, which will be subject to review by the OFT to determine whether ornot it should be referred to the Competition Commission for furtherinvestigation. However, the UK betting market is highly competitive, with asignificant number of alternative suppliers and vigorous price competition frombetting exchanges. In the LBO segment, reduced entry barriers over the last twoyears have prompted the expansion in the number of LBOs, reversing a longrunning trend of declining LBO numbers. As a result, the Board believes thatany potential competition issues will not be material in the overall context ofthe transaction. However, if the transaction is referred to the CompetitionCommission then William Hill's ability to realise the expected synergies will bedelayed until the end of that Competition Commission's review (which, inexceptional cases, can be up to a maximum of 32 weeks). Information on Stanley's Retail Bookmaking Stanley's Retail Bookmaking is the fourth largest operator of LBOs in the UK andis also one of the largest operators of LBOs in the Republic of Ireland.Stanley's Retail Bookmaking estate of 624 LBOs comprises 561 LBOs in the UK, 52in the Republic of Ireland and 11 in the Isle of Man and Jersey, trading underthe brand names 'Stanleybet' and 'Stanley Racing'. The Proposed Acquisition does not include Stanley Leisure's telephone,interactive and international betting operations. In the year ended 2 May 2004, Stanley's Retail Bookmaking generated EBITDA(earnings before interest, tax, depreciation and amortisation) of £37.2 millionalthough profits are expected to be marginally lower in the year ended 1 May2005 due to the effect of unfavourable horseracing and football results in thesecond half of Stanley Leisure's financial year (Note 1). Financial information on Stanley's Retail Bookmaking Summary financial information relating to Stanley's Retail Bookmaking for thethree years ended 2 May 2004, is set out in the table below: 52 weeks ended 28 April 52 weeks ended 27 April 53 weeks ended 2 May 2004 2002 2003 £ million £ million £ millionTurnover 568.4 771.8 1,365.7Gross Win 117.6 114.8 151.4EBITDA 26.2 24.3 37.2Net Assets 127.6 131.8 121.8 Notes: The amounts above are extracted from the unaudited combined financialinformation of Stanley's Retail Bookmaking for the relevant years presented inaccordance with the accounting policies of William Hill PLC. Management and Employees Recognising the importance of successful integration to achieving synergies weare promoting Tom Singer to the newly created position of Chief OperatingOfficer, with full responsibility for the integration programme. Tom hasextensive experience of business integration projects from his time withMcKinsey. In this role Tom will assume operational responsibility for Retail,Telephone and Interactive and Information Technology. He will have a dedicatedteam of retail professionals and functional specialists with experience ofintegrating LBOs into our estate, to manage all aspects of integration. We willbe instigating a search for a new Group Finance Director, although in theinterim, Tom will retain overall responsibility, and Shai Wasani, currentlyBusiness Development Director, will assume some of Tom's responsibilities forthe finance function. David Harding will continue in his role as Chief Executive and retainsresponsibility for trading, marketing and business development. The creation ofthe Chief Operating Officer position will allow David to devote more time to thelonger-term strategic opportunities, whilst ensuring that focus on integrationand delivery of synergies in the near-term is also guaranteed. William Hill will be seeking shareholder approval at the EGM for new share basedincentivisation arrangements to ensure the long term commitment for DavidHarding and Tom Singer to William Hill, details of which will be set out in fullin the circular. As soon as practicable, William Hill management will work with Stanley's RetailBookmaking to ascertain where there may be overlap in skills and resource withinthe enlarged Group and to ensure that William Hill fully understands theaspirations of the workforce going forward. Where roles may need to change orwhere roles no longer exist within the enlarged Group, William Hill will, aspart of the integration process described above, inform and consult with thoseemployees likely to be affected and will meet its statutory and contractualobligations to those employees in implementing any changes. Funding and Financial Effects of the Proposed Acquisition Funding The Proposed Acquisition will be funded through a combination of William Hill'sexisting resources and an increased level of borrowings, provided by new bankfacilities. These facilities incorporate minor amendments to the facilities putin place in March 2005 for the previously proposed return of capital to allowthem to be used to finance the Proposed Acquisition. In March 2005, to facilitate the previously proposed return of capital, and totake advantage of favourable conditions in credit markets, the Group secured newbank facilities of £1.2 billion with a consortium of banks. £465 million of thenew £600 million revolving credit facilities have been used to repay theexisting bank facilities, which have since been cancelled. A further £600million of new term facilities will become available to fund the ProposedAcquisition. Both tranches of the new facilities have been provided on acommitted and underwritten basis and have a five year term. Financial Effects The Proposed Acquisition is expected to enhance earnings per share beforeexceptional items and generate returns in excess of William Hill's cost ofcapital from 2006, the first full financial year following expected completion(Note 2). Impact of Proposed Acquisition on Capital Structure and Proposed Special PensionContribution In light of the Proposed Acquisition, William Hill will not be proceeding withthe return of capital announced on 2 March 2005. The Directors of William Hill will review the Company's capital structure with aview to establishing an efficient capital structure for the enlarged Grouptaking into account any LBO disposals required. The Directors will outlinetheir proposals for the Company's capital structure, which may include acombination of one-off returns of capital, share buy-backs and dividends,following completion of the Proposed Acquisition and after the competitionauthorities' review process is complete. Once the Company's capital structurereview is complete the Board will also propose, for approval by shareholders atthe next general meeting after the structure review, a specific restriction onits borrowing powers for inclusion in the Company's Articles of Association. The Directors intend to proceed with a special contribution of £40 million tothe Group's defined benefit pension scheme. The contributions will be spreadover a period of five years and are designed to eliminate the deficit calculatedon a continuing basis by the actuary as at September 2004. The Directors andpension trustee have consulted on this specific proposal and believe itrepresents an appropriate course of action that properly balances the legitimateinterests of shareholders, and members and pensioners. Current Trading In the 19 weeks ended 10 May 2005, gross win for the Group has been level withthe corresponding period last year that benefited from favourable sportingresults, particularly for horse racing. The comparatives remain tough until theend of June, primarily due to the Euro 2004 football championship that generated£11 million of gross win, but become less demanding from July onwards. Operating expenses are in line with our expectations, up 7.6 per cent. over thecorresponding period last year reflecting normal inflationary pressures, furtherincreases in extended trading, an additional 27 shops in the estate, and theintroduction of new contractual arrangements for shop staff with effect fromJanuary 2005. These new contractual arrangements are designed to be costneutral across the year as a whole but have the effect of increasing staff costsin the winter months in exchange for eliminating premium overtime payments thatare mainly incurred during the busy summer months. The Group is on track in rolling out new technology in its shops and hasinstalled electronic point of sale equipment (EPOS) in 250 shops and new textaudio-visual displays in 450 shops. Whilst it is still early in the roll-outprogramme, the experience to date suggests that potential savings in staff costsdue to the introduction of EPOS may exceed initial estimates. Whilst the Group is pursuing a number of development opportunities across allthree channels, and costs are firmly under control, the out turn for the fullyear will be influenced by the degree to which sporting results normalise in thecoming months. Terms of the Proposed Acquisition Under the terms of the share purchase agreement (the "Agreement") dated 16 May2005 between William Hill Organization Limited (the "Buyer"), Stanley Leisureand Stanley Overseas Holdings Limited, the Buyer has conditionally agreed toacquire the entire issued share capital of various companies that compriseStanley's Retail Bookmaking. The total consideration payable to Stanley Leisureon completion will be approximately £504 million on a cash-free, debt-freebasis, subject to adjustment to reflect the working capital position of thebusiness at completion. The Buyer is assuming the UK competition risk in relation to the ProposedAcquisition. The Agreement is conditional on shareholder approval by bothWilliam Hill and Stanley Leisure shareholders. In the event that either party'sshareholder approval is not obtained by 17 June or such other date as theparties may agree such party shall be required to pay to the other an amount of£9.2 million. Completion of the Proposed Acquisition is expected in June 2005. Under the terms of the Agreement, Stanley Leisure has given warranties andindemnities in respect of certain financial, property, licensing, pensions,employees, taxation and other matters, subject to agreed limitations onliability. Stanley Leisure has also agreed to various undertakings in relationto the carrying on of Stanley's Retail Bookmaking's business prior to completionof the Proposed Acquisition. To allow the Buyer a period of time to undertake the UK competition clearanceprocedures and to effect the integration of Stanley's Retail Bookmaking into theGroup following competition approval, Stanley Leisure and the Buyer have enteredinto transitional services and licence agreements. These arrangements requireStanley Leisure and its retained group to provide Stanley's Retail Bookmakingvarious services and the right to use certain brand names for an interim periodafter completion of the Proposed Acquisition. The William Hill group will alsobe required to provide certain services back to Stanley Leisure and its retainedgroup. Enquiries:William Hill PLC (020) 8918 3910David HardingTom Singer Citigroup (Financial Adviser to William Hill) (020) 7986 4000David WormsleyJan Skarbek Citigroup (Corporate Broker to William Hill) (020) 7986 4000David JamesAndrew Seaton Brunswick Group Limited (020) 7404 5959James BradleyWilliam Cullum Note 1: After adjustment to reflect the application of William Hill's accountingpolicies and the transfer of certain assets held elsewhere in the StanleyLeisure group into Stanley's Retail Bookmaking. Note 2: Nothing in this announcement should be construed as a profit forecast orbe interpreted to mean that the future earnings per share or profits of WilliamHill will necessarily be greater than the historic published earnings per share. Citigroup Global Markets Limited ("Citigroup") is acting for William Hill and no-one else in connection with the matters referred to in this announcement andwill not be responsible to anyone other than William Hill for providing theprotections afforded to clients of Citigroup or for providing advice in relationto these matters. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
WMH.L