William Hill online acquisition and rights issue
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THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION TO BE CONTAINED IN THE PROSPECTUS COMPRISING A CIRCULAR EXPECTED TO BE PUBLISHED BY THE COMPANY TODAY IN CONNECTION WITH THE PROPOSED ACQUISITION AND RIGHTS ISSUE (THE “PROSPECTUS”). COPIES OF THE PROSPECTUS WILL BE AVAILABLE FROM THE COMPANY'S REGISTERED OFFICE AND WILL BE AVAILABLE FOR INSPECTION BY THE PUBLIC DURING NORMAL BUSINESS HOURS ON ANY DAY (EXCEPT SATURDAYS, SUNDAYS AND PUBLIC HOLIDAYS) AT THE FINANCIAL SERVICES AUTHORITY'S DOCUMENT VIEWING FACILITY.
1 March 2013
For immediate release
William Hill PLC
Proposed acquisition of the outstanding 29 per cent. of William Hill Online and fully underwritten Rights Issue
The Board of William Hill PLC (LSE: WMH) (“William Hill" or “the Group”) today announces, following the completion of the William Hill Online Call Option valuation process, the proposed acquisition of the 29 per cent. of William Hill Online that the Group does not already own from Genuity Services Limited ("Playtech") for a consideration of approximately £424 million (the "Proposed Acquisition") which represents a multiple of 9.3 times 2012 EBITDA1.
William Hill intends to raise approximately £375 million (net of expenses) through a fully underwritten Rights Issue of 2 New Ordinary Shares for every 9 Existing Ordinary Shares at 245 pence per share which, together with approximately £50 million from part of the 2012 Bridge Credit Facility, will be used to finance the Proposed Acquisition whilst maintaining an appropriate capital structure for the Group.
William Hill Online is the UK's leading online betting and gaming business by revenue2, and enables customers to access sports betting, casino games, poker and bingo via some or all of the internet, telephone, mobile devices and by text-based services.
The Board considers that William Hill Online is a strong, well-established industry leader. It further believes that the maintenance of a minority interest within the structure is no longer consistent with the long-term strategic evolution of the Group. The Board is confident that the future prospects for William Hill Online are strong and believes that it is in the best interests of Shareholders to acquire the minority interest held by Playtech. The rationale for the Proposed Acquisition is as follows:
- this is the first opportunity to take full ownership of a growth business with a market-leading position and strong earnings and cash flow. It represents a compelling opportunity to strengthen future growth prospects for the broader Group;
- increased strategic flexibility arises from the simplified ownership structure. Full ownership of William Hill Online would provide the Group with an opportunity to fully develop William Hill Online's future growth potential through capital investment to further enhance areas such as product development, website development and customer relationship management, or through bolt-on acquisitions;
- increased operational freedom to leverage William Hill Online’s assets and know-how across the broader Group, supporting pursuit of the Group’s multi-channel strategy and selective international expansion, in particular in the US and, potentially, Australia; and
- the Board expects the Proposed Acquisition to be earnings accretive on a per share basis in the current financial year as compared to the Rights Issue adjusted alternative.3
The Rights Issue is fully underwritten and will raise net proceeds of approximately £375 million. The Rights Issue and the Proposed Acquisition have received strong support from shareholders.
Ralph Topping, Chief Executive of William Hill, commented:
“William Hill Online has consistently delivered strong net revenue growth since it was formed in December 2008. This joint venture has been very successful for both parties and we look forward to continuing our relationship with Playtech as a key software supplier.
Having been advised of the valuation of Playtech’s 29% interest, the Board has concluded that it is in the best interests of our shareholders to exercise our call option to assume full ownership of this attractive, high growth, high performing business.
We are very pleased with the indications of support from shareholders so far for the acquisition and the Rights Issue. In our view, the Rights Issue is the most appropriate way to fund the Proposed Acquisition. This will leave the Group with the appropriate capital structure, taking into account expected trading conditions and potential future developments, and the flexibility to pursue its stated strategy.”
The Proposed Acquisition is subject to the approval of William Hill Shareholders as it is classified under the Listing Rules as a related party transaction on account of Playtech's 29 per cent. shareholding in each of WHG Trading and WHG (International), the joint venture companies comprising William Hill Online, which are subsidiaries of William Hill.
On 28 February 2013, William Hill notified Playtech of its intention to exercise the Call Option in 2013. In the event that William Hill does not duly complete the purchase by 30 April 2013, then William Hill’s right to exercise the Call Option in 2015 will automatically terminate.
Playtech has the right to elect for a portion of the consideration for the Proposed Acquisition to be satisfied in the form of new William Hill Ordinary Shares. As at the date of this announcement, Playtech has indicated to William Hill that it does not intend to take Ordinary Shares and as such William Hill is funding the Proposed Acquisition on that basis.
The Prospectus being published by William Hill today contains details of the Rights Issue. Shareholder approval for the resolution required to approve the Proposed Acquisition will be sought at an Extraordinary General Meeting to be held at the offices of Ashurst LLP, Broadwalk House, 5 Appold Street, London EC2A 2HA on 18 March 2013 at 9.00 a.m.
Application has been made to the FSA for the New Ordinary Shares (nil paid and fully paid) to be admitted to the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on its main market for listed securities. Subject to Shareholder approval, among other things, it is expected that Admission will become effective on 19 March 2013 and that dealings in the New Ordinary Shares, nil paid, will commence on the London Stock Exchange at 8.00 a.m. on that date. The expected latest time for acceptance and payment in full under the Rights Issue will be 11.00 a.m. on 4 April 2013.
This summary should be read in conjunction with the full text of this announcement and its appendices.
(1) EBITDA is calculated as pre-exceptional profit/loss before interest, tax, depreciation and amortisation (including amortisation of specifically identified intangible assets recognised on acquisitions.)
(2) Source: Gambling Data, European Online Regulated Markets Data Report, 2012.
(3) This should not be construed as a profit forecast or interpreted to mean that the future earnings per share, profits, margins or cash flows of William Hill necessarily be greater than the historic published figures. The Rights Issue adjusted alternative is the comparative earnings per share figure assuming the Proposed Acquisition did not take place but adjusted for the bonus element of the Rights Issue.
Investor and Analyst Meeting:
William Hill will hold a meeting for analysts and investors on 1 March 2013 at 9.00 a.m. (UK time). 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: 0845 634 0041
Outside the UK: +44 (0)20 8817 9301
The participant passcode is available at: www.williamhillplc.com
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, available at www.williamhillplc.com, until 15 March 2013.
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