888 Holdings has issued an update on the progress of its acquisition of William Hill in a prospectus on the development, detailing the timetable and risk factors involved.
Approved by the Financial Conduct Authority (FCA), the prospectus explained that the international gambling group will hold an Extraordinary General Meeting on 16 May to seek approval from its shareholders.
Although the takeover of William Hill International’s non-US assets has been approved by 888’s Board of Directors, the company’s shareholders are yet to give it the green light.
Following the results of the EGM – and should the firm’s stakeholders vote to move ahead with the international merger – 888 anticipates to finalise the acquisition within the remainder of the first half of 2022.
Explaining the ‘highly compelling strategic rationale’ behind the merger to stakeholders in the prospectus, 888 Chairman Lord Jonathan Mendelsohn detailed that the acquisition will create a ‘global online betting and gaming leader’ by combining two ‘complementary businesses’ and ‘leading brands’.
“The proposed acquisition represents a transformational opportunity for 888 to significantly increase its scale, further diversify and strengthen its product mix and build leading positions across several of its key markets,” the Chairman explained.
“The combination of 888 and William Hill International is expected to deliver significant operating efficiencies, including estimated pre-tax cost synergies of at least £100m in 2025, leading to improved profit margins.”
888 further estimated that had the acquisition been achieved prior to 2021, the enlarged group would have closed last year’s trading with revenue of £2.1bn and adjusted EBITDA of $437m.
“The enlarged group will be strongly growth-oriented, benefitting from a clear scale advantage and strong product and geographic diversification,” Lord Mendelsohn continued.
“With a focus on regulated markets, it will be able to offer customers world-class products, supported by leading betting and gaming brands, driving sustained growth and shareholder value creation over the medium and long term.”
In its prospectus, 888 did also identify some potential ‘risk factors’ to the acquisition, however, notably identifying the potential outcomes of the 2005 Gambling Act review as posing a possible hurdle to the enlarged company.
888 explained: “The UK government’s ongoing review of the Gambling Act may result in more onerous regulation of the betting and gaming industry in the UK, the single largest market for both the 888 Group and the target business, which could have a material adverse effect on the business, results of operations, financial condition and prospects of the enlarged group.”
In particular, the Gambling Act review remains a cause of concern for 888 due to the UK representing the largest market for both itself and its potential William Hill subsidiary.
The operator noted that 39.7% of 888 revenue and 77.8% of William HIll revenue in 2021 was generated from the UK market – therefore, any negative consequences of Britain’s legislative overhaul could ‘impede the ability’ of the merged business to generate revenue from this sector.