In an investors note, analyst Simon French has recently raised the possibility of William Hill Plc. buying out Playtech’s 29% share of William Hill Online.
The talks about William Hill Plc. possibly buying out fellow company Playtech from William Hill Online have been sparked recently when the venture commented on the issue in its last financial statistics report released in July.
The report explained that:
“In the fourth quarter the group will have the opportunity to commence a process to buy the Playtech stake through the first of two contractual call options.”
“Our chairman and chief executive continue to meet regularly with their counterparts at Playtech ahead of this. Discussions have been amicable and continue.”
The most prominent person to comment on the issue was financial analyst Simon French from Panmure Gordon. Based on the calculations conducted by French and the evaluations of various institutions such as JP Morgan, Deutsche Bank and UBS, William Hill is believed to have to pay a sum of around $590.8 million in order to buy out Playtech.
French explained in his note to investors that Playtech also has the option to receive a 10% share of William Hill itself if any deal is to be reached. He concluded that based on the investment Playtech put into the joint business so far, letting William Hill buy out its 29% stake would be “an appealing option.”
William Hill’s internet operation was re-launched four years ago as a joint venture between the company and the Israeli online gambling software and technology developer Playtech run by the businessman Teddy Sagi. Playtech owns 29% of William Hill Online.
For its stake of 29% Playtech paid a sum of $319.7 million in 2008. The deal also allowed Playtech to provide William Hill Online with its online casino and online poker software products as well as marketing services.
The deal between the two companies allows William Hill Plc. to buy out Playtech’s 29% share from the venture. The date for such a decision expires this November. Based on the somewhat troubled relationship between the two companies it’s likely that William Hill will exercise its buy-out option.
The buy-out would also strengthen William Hill’s credibility in the US. Not so long ago William Hill had successfully applied for a Nevada online gambling license. During the hearing, Nevada Gambling Board members expressed their concern regarding William Hill’s cooperation with Playtech, a company known for operating in unregulated jurisdictions and run by a CEO who was in prison for fraud.
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