Corporate By William Hill PLC

Recommended offer for sportingbet PLC

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

For immediate release

20 December 2012

RECOMMENDED OFFER

FOR

SPORTINGBET PLC

BY

WILLIAM HILL AUSTRALIA PTY LIMITED, A WHOLLY OWNED SUBSIDIARY OF WILLIAM HILL PLC

AND

GVC HOLDINGS PLC

to be effected by means of a Scheme of Arrangement 
under Part 26 of the Companies Act 2006

Summary

  • The boards of William Hill plc ("William Hill"), GVC Holdings plc ("GVC") and Sportingbet plc (“Sportingbet”) are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which GVC will acquire the entire issued and to be issued share capital of Sportingbet and members of the William Hill Group will acquire the Sportingbet Australian Business and certain other assets from the Sportingbet Group and be granted a call option over the Sportingbet Spanish Business (the “Offer”). The Offer is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.
  • The Offer values each Sportingbet Share at 56.1 pence per share, based on a Closing Price per GVC Share of 233.5 pence on 15 October 2012, being the last Business Day prior to the suspension of the GVC Shares, and taking into account the previously announced final dividend of 1.1 pence per Sportingbet Share. The Offer comprises 44.8 pence in cash and 0.0435 New GVC Shares per Sportingbet Share and, in addition, those Sportingbet Shareholders on the Sportingbet register at the dividend record time (21 December 2012) will receive the final dividend of 1.1 pence per Sportingbet Share in respect of the year ended 31 July 2012 (which was approved at Sportingbet's AGM on 19 December 2012). 
  • On this basis, the Offer values the entire issued and to be issued share capital of Sportingbet on a fully diluted basis (assuming payment in full to Sportingbet Convertible Bondholders of the Sportingbet Convertible Bonds at their see through conversion value and exercise of all outstanding in the money options and LTIP awards) at approximately £485 million.
  • Therefore, the Offer (taking into account the Sportingbet final dividend) represents a premium of approximately:
    • 70.0 per cent. to the Closing Price per Sportingbet Share of 33.0 pence on 16 July 2012, being the last Business Day prior to the publication of press speculation that Sportingbet was a potential bid target;
    • 57.1 per cent. to the average Closing Price per Sportingbet Share of 35.7 pence for the three month period ended on 18 September 2012, being the last Business Day prior to the public announcement of William Hill and GVC’s interest in Sportingbet;
    • 28.2 per cent. to the Closing Price per Sportingbet Share of 43.8 pence on 18 September 2012, being the last Business Day prior to the public announcement of William Hill and GVC’s interest in Sportingbet; and
    • 8.4 per cent. to the Closing Price per Sportingbet Share of 51.8 pence on 19 December 2012, being the last Business Day prior to the making of this announcement.
  • A Mix and Match Facility will be provided, which will allow Scheme Shareholders (other than Restricted Overseas Shareholders) to elect to vary the proportions in which they receive cash and New GVC Shares.
  • Through the irrevocable undertakings by certain Sportingbet Shareholders and the cash underpinning and other arrangements that GVC has put in place (as described below), elections by other eligible Scheme Shareholders under the Mix and Match Facility to take up to the entirety of their consideration under the Offer in the form of cash will be satisfied in full, if the elections for New GVC Shares which are committed to under the irrevocable undertakings detailed below are duly made in accordance with their terms.
  • Henderson Global Investors, which through the Volantis Capital team exercises investment management control over 10,102,999 Sportingbet Shares, representing approximately 1.5 per cent. of the share capital of Sportingbet in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement), has executed an irrevocable undertaking consenting to the Scheme and undertaking to be bound by it and undertaking to vote in favour of the Sportingbet Shareholder Resolution to be proposed at the Sportingbet General Meeting and also to elect under the Mix and Match Facility to take the entirety of the consideration attributable to such Sportingbet Shares under the Offer in the form of New GVC Shares.
  • Certain other Sportingbet Shareholders (namely DBS Advisors Ltd., Mark Blandford (with family trusts) and Rockridge Investments S.A.), who hold or are beneficially entitled to 63,460,735 Sportingbet Shares in aggregate, representing approximately 9.5 per cent. of the share capital of Sportingbet in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement) have executed irrevocable undertakings to vote both in favour of the Scheme and in favour of the Sportingbet Shareholder Resolution, and also to elect under the Mix and Match Facility to take the entirety of their consideration under the Offer in the form of New GVC Shares.
  • In addition, Bonaire Investment Holdings Ltd, which holds or is beneficially entitled to 45,045,275 Sportingbet Shares, representing approximately 6.8 per cent. of the share capital of Sportingbet in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement), has executed an irrevocable undertaking to vote both in favour of the Scheme and in favour of the Sportingbet Shareholder Resolution, and also to take a minimum of 1,100,000 New GVC Shares under the Mix and Match Facility as its consideration under the Offer.
  • In addition, GVC has entered into cash underpinning arrangements with Henderson AIA and also with Richard Griffiths and Antisoma plc (who are respectively a controlling shareholder of, and a company connected to, Ora Capital) whereby if, notwithstanding the irrevocable commitments to elect for New GVC Shares referred to above (and other eligible Scheme Shareholders either making no election under the Mix and Match Facility or making an election for an increased proportion of New GVC Shares), the Mix and Match Facility does not operate so as to deliver to any eligible Scheme Shareholders the full amount of cash consideration for which they have elected, Henderson AIA, Richard Griffiths and Antisoma plc will acquire for cash (at a price of 233.5 pence per New GVC Share) the New GVC Shares otherwise attributable to such eligible Scheme Shareholders (or such of those shares as those eligible Scheme Shareholders have elected not to receive). This will result in additional cash being available to those eligible Scheme Shareholders whose elections for cash have not been fully satisfied through the operation of the Mix and Match Facility. The maximum commitments of Henderson AIA, Richard Griffiths and Antisoma plc under these cash underpinning arrangements are in respect of 5,000,000 New GVC Shares, 783,725 New GVC Shares and 1,713,062 New GVC Shares respectively.
  • Further, to the extent that eligible Scheme Shareholders elect for cash consideration, and such elections cannot otherwise be satisfied pursuant to the operation of the Mix and Match Facility and the cash underpinning arrangements referred to above, GVC will make an amount of up to £7.226 million available pursuant to the Offer to satisfy such elections (and accordingly will not issue up to 3,094,229 New GVC Shares which would otherwise have been issued to such Scheme Shareholders).
  • The ability of eligible Scheme Shareholders to receive their entire consideration in the form of cash if they elect to do so under the Mix and Match Facility will be dependent on the irrevocable undertakings provided by certain Sportingbet Shareholders to elect for New GVC Shares (as detailed above) being complied with in accordance with their terms or, failing that, on sufficient elections for New GVC Shares being made by other eligible Scheme Shareholders.
  • Each of the Sportingbet Shareholders who has irrevocably undertaken to elect under the Mix and Match Facility to take the entirety of its consideration under the Offer in the form of New GVC Shares, or to receive as consideration not less than a specified minimum number of New GVC Shares, has also undertaken to deliver a Form of Election to this effect within seven days after the posting of the Scheme Document. In the event that any such Form of Election is not duly received within this seven day period, an appropriate announcement will be made pursuant to Rule 2.11 of the City Code.
  • In addition, UBS, which exercises investment control over 29,472,443 Sportingbet Shares, representing approximately 4.4 per cent. of the share capital of Sportingbet in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement), has executed an irrevocable undertaking to vote both in favour of the Scheme and in favour of the Sportingbet Shareholder Resolution. UBS has also stated, on a non-binding basis, that, subject to any client restrictions, it intends to make no election under the Mix and Match Facility.
  • The Sportingbet Directors, who have been so advised by Lazard, consider the terms of the Offer to be fair and reasonable. In providing advice to the Sportingbet Directors, Lazard has taken into account the commercial assessments of the Sportingbet Directors.
  • Accordingly, the Sportingbet Directors intend unanimously to recommend that Scheme Shareholders and Sportingbet Convertible Bondholders vote in favour of the Scheme at the Court Meetings and to recommend that Sportingbet Shareholders vote in favour of the Sportingbet Shareholder Resolution to be proposed at the Sportingbet General Meeting, as the Sportingbet Directors who beneficially own or control, and can procure the voting of, Scheme Shares have irrevocably undertaken to do in respect of their controlled holdings of, in aggregate, 5,492,756 Sportingbet Shares, representing approximately 0.8 per cent. of the share capital of Sportingbet in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement). The Sportingbet Directors do not intend to make any recommendation to eligible Scheme Shareholders as to whether or not they should make any particular election under the Mix and Match Facility. In determining whether to make any election under the Mix and Match Facility, eligible Scheme Shareholders should pay particular consideration to the contents of the GVC Prospectus which will accompany the Scheme Document to be sent to Scheme Shareholders in due course.
  • Accordingly, William Hill and GVC have received irrevocable undertakings in support of the Scheme in relation to an aggregate of 153,574,208 Sportingbet Shares, representing approximately 23.0 per cent. of the share capital of Sportingbet in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement). Further details of these irrevocable undertakings are set out in Part A of Appendix III to the following announcement.
  • The GVC Directors intend unanimously to recommend that GVC Shareholders vote in favour of the GVC Shareholder Resolution to be proposed at the GVC General Meeting, as the GVC Directors who beneficially own or control, and can procure the voting of, GVC Shares have irrevocably undertaken to do in respect of their controlled holdings of, in aggregate, 522,033 GVC Shares, representing approximately 1.7 per cent. of the share capital of GVC in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement).
  • Furthermore, GVC has received irrevocable undertakings from certain other GVC Shareholders (namely Henderson Global Investors, Ora Capital and Audley Capital Management Limited) to vote in favour of the GVC Shareholder Resolution to be proposed at the GVC General Meeting in respect of an aggregate of 15,855,961 GVC Shares, representing approximately 50.2 per cent. of the share capital of GVC in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement).
  • Accordingly, GVC has received irrevocable undertakings in relation to an aggregate of 16,377,994 GVC Shares, representing approximately 51.8 per cent. of the share capital of GVC in issue on 19 December 2012 (being the last Business Day prior to the making of this announcement) to vote in favour of the GVC Shareholder Resolution to be proposed at the GVC General Meeting.  Further details of these irrevocable undertakings are set out in Part B of Appendix III to the following announcement.
  • Under the terms of the Offer, Sportingbet Convertible Bondholders will be entitled to receive in cash the amount that represents the see through value of the Sportingbet Convertible Bonds under their terms as if the Sportingbet Convertible Bondholders had exercised their right to convert their bonds into Sportingbet Shares at the Effective Date and received cash consideration of 55 pence per resulting Sportingbet Share. The cash amount payable to Sportingbet Convertible Bondholders will be calculated based on the Change of Control Conversion Price. Sportingbet Convertible Bondholders will not be entitled to participate in the Mix and Match Facility.
  • Following the issue of the Reduction Court Order by the Court and prior to the Effective Time, members of the William Hill Group will acquire the Sportingbet Australian Business, the “miapuesta” brand and certain Guernsey domiciled companies that hold the title to the Guernsey Properties from the Sportingbet Group and be granted a call option over the Sportingbet Spanish Business. At the Effective Time, GVC will acquire the entire issued and to be issued share capital of Sportingbet, which will then be the holding company of the remaining businesses carried on by Sportingbet and its subsidiary undertakings (the “Remaining Sportingbet Businesses”).
  • Sportingbet is an online sports betting and gaming group focused on the European and Australian markets supplemented by an emerging markets business.  The Sportingbet Group facilitates online sports betting, casino, poker and gaming through a range of branded websites.  The Sportingbet Group currently holds betting and gaming licences and approvals in Alderney, Australia, Denmark, Ireland, Italy, Malta, South Africa, Spain and the UK.  For the year ended 31 July 2012, Sportingbet generated EBITDA of £56.8 million (adjusted for exceptional items, share option charges and amortisation of other intangible assets) on Amounts Wagered of £2,349.2 million.
  • William Hill is one of the world's leading betting and gaming companies, employing more than 15,000 people. It is now the UK's largest bookmaker with 2,370 licensed betting offices that provide betting opportunities on a wide range of sporting and non-sporting events, gaming on machines and numbers-based products including lotteries.
  • GVC is a leading provider of B2B and B2C services to the online gaming and sports betting markets and its shares have been traded on AIM since 2004. GVC’s B2C offerings target German speaking markets and Brazilian customers, while the B2B business unit consists principally of the third party support contract for East Pioneer Corporation B.V., which acquired the Superbahis brand from Sportingbet in November 2011.
  • For William Hill, Australia is one of the most attractive online locally licensed markets where it, as yet, does not have a presence. The Australian betting market is one of the largest locally licensed betting markets in the world and the Sportingbet Australian Business is one of the leading online corporate bookmakers in Australia. William Hill has particular skills in those areas of the market that are demonstrating strong structural growth: online, mobile, fixed odds and sports (non-horse racing) betting. William Hill believes it has the resources and expertise to continue to grow the Sportingbet Australian Business successfully, building on its existing strong market position. William Hill has also recently entered the licensed online Spanish gambling market on an organic basis. The acquisition of the Sportingbet Spanish Business is expected to allow William Hill to achieve critical mass in that market faster than it otherwise would have done. Overall, William Hill believes that the acquisition of the Regulated Sportingbet Businesses will further develop the William Hill Group’s online and multi-channel operations and increase the William Hill Group’s exposure to attractive locally licensed jurisdictions and its geographic diversification, all of which are central elements of the William Hill board’s strategy. In doing so, the William Hill board believes that William Hill is well placed to create further value for its shareholders.
  • For GVC, this transaction is consistent with its strategy of generating returns from highly cash generative internet gaming and gambling brands. The Remaining Sportingbet Businesses include a number of jurisdictions where Sportingbet does not have a local licence that will complement the existing profile of GVC and consolidate GVC’s position as a leading operator in markets which may soon be locally licensed. GVC will seek to leverage the market leading sportsbook platform and trading team of these businesses to provide further growth. In addition, the Offer will result in GVC’s earn-out liabilities in relation to the Superbahis brand becoming recoverable by the Enlarged GVC Group.
  • The Offer will require the approval of Sportingbet Shareholders, Sportingbet Convertible Bondholders and GVC Shareholders, the sanction of the Court, the agreement of the London Stock Exchange to admit or re-admit (as applicable) the GVC Shares (including the New GVC Shares) to trading on AIM and receipt of the Australian Licence Approval and the Australian Foreign Investment Review Board Approval. Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders and Sportingbet Convertible Bondholders, irrespective of whether or not they attended or voted at the Shareholder Court Meeting or the Sportingbet General Meeting (or, in the case of the Sportingbet Convertible Bondholders, at the Sportingbet Convertible Bond Court Meeting) and, if they attended and voted, whether or not they voted in favour.
  • It is expected that the Scheme Document, containing further information about the Offer and notices of the Court Meetings and the Sportingbet General Meeting, together with the relevant Form(s) of Proxy and Form of Election, will be sent to Sportingbet Shareholders and Sportingbet Convertible Bondholders on or around 15 January 2013. It is expected that, subject to the satisfaction or (where applicable) waiver of the conditions and certain further terms set out in Appendix I to the following announcement and to be set out in the Scheme Document, the Scheme will become fully operative in March 2013.
  • It is expected that the GVC Prospectus, containing information about the New GVC Shares and the Enlarged GVC Group, and the GVC Shareholder Circular, containing the notice convening the GVC General Meeting, will be published at the same time as the Scheme Document is posted to Sportingbet Shareholders and Sportingbet Convertible Bondholders.
  • Commenting on the Offer, Ralph Topping, Chief Executive of William Hill, said:  

“We are pleased to reach agreement with the Board of Sportingbet, who unanimously recommend our joint offer. This acquisition not only highlights William Hill's commitment to grow further internationally into regulated, high growth markets such as Australia, but also supports our strategic aim to diversify revenue sources into new territories and through greater multi-channel usage. Our unique combination with GVC provides a complete solution for Sportingbet and its shareholders and we look forward to working with the management and employees of Sportingbet in Australia and Spain to combine our joint experience and expertise to create additional value for our customers and shareholders.”

  • Commenting on the Offer, Kenneth Alexander, Chief Executive Officer of GVC, said:  

“The acquisition of the Remaining Sportingbet Businesses will be transformational for GVC.   The businesses GVC is acquiring will complement the existing profile of GVC and should consolidate its position as one of the leading operators in its market.  A key element of GVC’s strategy has been maintaining an aggressive dividend policy and the GVC Directors believe that the acquisition of the Remaining Sportingbet Businesses will contribute to this strategy going forward.”

  • Commenting on the Offer, Andrew McIver, Chief Executive Officer of Sportingbet, said:  

“Sportingbet is one of the world's best known online sports betting companies renowned for the quality of its product offering, customer service and technological innovation. This position has been achieved thanks to the considerable efforts and skills of all our staff, who managed so successfully to turn the business around following the Sportingbet Group's exit from the US market in 2006. Every Sportingbet employee around the world should be proud of what has been achieved. This offer represents a good outcome for Sportingbet shareholders as they can elect to receive the offer in cash and it is at a significant premium to the Group’s share price in the three month period prior to the consortium announcing their interest in Sportingbet on 19 September 2012.”

Investor and Analyst Meeting:

William Hill will hold a meeting for analysts and investors on 20 December 2012 at 4.30 p.m. (UK time) to discuss the Offer. The meeting will take place at The Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED. Interested parties can dial into this meeting using the following access details:

Inside the UK 0800 634 5205
Outside the UK +44 (0) 20 8817 9301
The participant passcode is 9624114

The meeting will also be available by webcast on William Hill’s website for all interested parties. The webcast can be accessed via William Hill’s website, www.williamhillplc.com. A replay facility will be available via William Hill’s website and by dialling +44 (0) 20 7769 6425 quoting the replay access code 9589 073# until 3 January 2013.

Enquiries

William Hill
Ralph Topping, Chief Executive
Neil Cooper, Group Finance Director
Lyndsay Wright, Director of IR
+44 (0)20 8918 3614
   
Citi (Lead Financial Adviser and Joint Broker to William Hill)
Jan Skarbek
Andrew Seaton
Sajjad Vakilian
+44 (0)20 7986 4000
   
Investec (Financial Adviser and Joint Broker to William Hill)
Chris Treneman
James Rudd
+44 (0)20 7597 5970
   
Brunswick (PR Adviser to William Hill)
Simon Sporborg
+44 (0)20 7404 5959
   
GVC
Kenneth Alexander, Chief Executive Officer
Richard Cooper, Group Finance Director
+44 (0)20 7398 7702
   
Daniel Stewart (Financial Adviser, NOMAD and Broker to GVC)
Paul Shackleton
David Hart
+44 (0)20 7776 6550
   
Abchurch (PR Adviser to GVC)
Henry Harrison-Topham
+44 (0)20 7398 7702
   
Sportingbet
Andrew McIver
Jim Wilkinson
+44 (0)20 7184 1800
   
Lazard (Financial Adviser to Sportingbet)
Cyrus Kapadia
Aamir Khan
+44 (0)20 7187 2000
   
Canaccord Genuity Limited (Broker to Sportingbet)
Erik Anderson
Bruce Garrow
+44 (0)20 7523 8350
   
Maitland (PR Adviser to Sportingbet)
George Hudson
Daniel Yea
+44 (0)20 7379 5151

This summary should be read in conjunction with, and is subject to, the full text of the following announcement (including its Appendices). References to "this announcement" shall be deemed to refer to this summary and the following announcement (including its Appendices).  The Offer will be subject to the conditions and certain further terms set out in Appendix I to this announcement and to the full terms and conditions to be set out in the Scheme Document, the Forms of Proxy and the Form of Election. Appendix II to this announcement contains the sources and bases of certain information contained in this announcement. Appendix III to this announcement contains details of the irrevocable undertakings received by William Hill and GVC in respect of voting in favour of the Scheme at the Shareholder Court Meeting and in favour of the Sportingbet Shareholder Resolution at the Sportingbet General Meeting and in relation to elections for New GVC Shares under the Mix and Match Facility and also details of the irrevocable undertakings procured by GVC in respect of voting in favour of the GVC Shareholder Resolution at the GVC General Meeting and details of the cash underpinning arrangements described in this announcement. Appendix IV to this announcement contains the definitions of certain terms used in this announcement.

See Full Press release