The board of 888 Holdings has notified investors that it has reached an agreement with Caesars Entertainment to amend the terms of its acquisition of William Hill.
Citing a change in macroeconomic conditions and regulatory/compliance factors since the deal was initiated on 9 September 2021, Caesars has agreed to lower its enterprise valuation of William Hill from £2.2bn to £1.95/ £2.05bn.
The agreement sees 888 net a £250m cash reduction, of which £100m will be maintained as an FY2024 earnout incentive, based on William Hill’s EBITDA performance.
888 maintains its 2022 schedule in which it expects to finalise its takeover of William Hill by the end of H1 trading.
Of significance, key elements of the amended agreement saw 888 confirm that William Hill expects to incur losses from an ongoing licence review conducted by the UK Gambling Commission (UKGC).
“Following a compliance assessment conducted in July and August 2021, the William Hill Group is subject to an ongoing licence review and is addressing certain action points raised by the UKGC in relation to WH’s social responsibility and anti-money laundering obligations,” the update disclosed.
Awaiting the outcome of the review, Caesars has agreed to place William Hill, Mr Green and all UK licensed entities under an Indemnity Deed to compensate 888 on negative regulatory consequences.
The update saw 888 provide a full-year 2021 statement on William Hill’s financial performance that saw the operator’s UK and Euro units achieve corporate revenues of £1.24bn (+7%), alongside a 10% uplift in underlying EBITDA of £164m.
The board of 888 has revised its funding options to complete its deal, in which the company expects to generate proceeds of £500m cash by executing a new private investor bookbuild, issuing up to 70 million new shares, representing approximately 19% of the total issued share capital of the business.
“The board continues to believe the acquisition has highly compelling strategic and financial benefits, with the current macroeconomic environment and changing market conditions across its key markets only serving to strengthen the rationale for bringing together two highly complementary businesses and combining two of the industry’s leading brands,” 888 explained.
“Alongside the strategic benefits, the combination of 888 and WHI is expected to deliver significant operating efficiencies, including pre-tax cost synergies of at least £100m.”
888 will publish a new deal prospectus and provide further deal information in its Q1 trading update, scheduled for later this month.