This year seems set to be transformative for the UK betting industry, with growing US giants targeting takeovers in a bid to supercharge their expansion across America.
An expected relaxation of online gambling rules in the United States in the next few years is going to create huge opportunities for companies operating in the sector.
In the UK, gambling laws are some of the most relaxed in the world, which has enabled companies to build vast fortunes in the last few years.
Mergers are going to be making headline news throughout 2021, but what are some of the deals that are likely to be done in the coming months?
Caesars to purchase William Hill
One takeover that is in the offing is the planned purchase of William Hill by Caesars Entertainment, which is one of the biggest casino companies in America.
William Hill, best known for its fleet of traditional UK high-street bookmakers, has been looking to break the US market for some time but it soon now becomes a part of the Caesars empire.
This deal has not yet been fully rubber-stamped even though it was first announced by Caesars back in September 2020.
With the steady growth of the online gambling industry in both US and UK, combining the two major companies may be in the cards for successful future endeavours.
Announcing the deal in a press release, Caesars said the takeover of William Hill valued the British business at close to $3 billion.
A statement from the company described William Hill as “one of the world’s leading betting and gambling companies”, adding the deal was expected to be completed in the second half of 2021.
Caesars Entertainment chief executive Tom Reeg added: “We look forward to working with William Hill to support future growth in the U.S. by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment.”
Group sales at William Hill fell by 16 per cent in 2020, with a £30 million loss forecast by the firm, but the company says this will not affect the impending takeover by Caesars.
Not all UK betting brands have been as keen to go ahead with proposed takeovers from US giants, however, as the rise in gambling on sport increases their valuations.
Ladbrokes owner rejects MGM offer
Ladbrokes is one of William Hill’s top rivals in the UK betting industry, but the company’s owner Entain has rejected an initial takeover deal from MGM Resorts International (MGMRI).
MGMRI has been pursuing a variety of deals in a bid to position itself in preparation for the expected boom in US online gambling in the near future.
But it does not seem as though a merger with Entain is going to happen any time soon after the Ladbrokes owner said the offer from MGMRI fell well short of its valuation.
“Entain has informed MGMRI that it believes that the proposal significantly undervalues the company and its prospects,” said a statement released by the company.
“The board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies.”
Entain, which also owns Coral, was reportedly valued at more than £8 billion by the initial offer but may have been holding out for a bigger offer from MGMRI.
But the Las Vegas-based company has opted not to move forward with a further proposal, confirming it is stepping back from the deal “after careful consideration and having reflected on the limited recent engagement between the respective companies”.
Following in Paddy Power’s footsteps
US giants trying to buy UK betting industry companies may have been inspired by the deal between Flutter Entertainment and The Stars Group towards the end of 2019.
Flutter, the owner of brands like Paddy Power and Betfair, confirmed that it was paying around £10 billion for a deal that would see it snap up TSG, which owns UK betting company Skybet.
It was said that the agreement led to the creation of the world’s largest online betting firm, leaving other companies in the sector scrambling to keep pace with the new entity.
Flutter now employs over 13,000 people around the world and the firm recently snapped up an increased shareholding in the American fantasy sports firm FanDuel in a deal worth $4.2 billion.
It seems certain that more UK betting brands could be targeted by US gambling companies as the industry looks to ramp up activity in the coming years.
