William Hill Acquiring Parts of Playtech

Written by:
Jagajeet Chiba
Published on:
Oct/20/2008
William Hill

The United Kingdom's second largest bookmaker, William Hill, is reportedly acquiring parts of online casino software giant Playtech according to The Independent.

The revelation came as William Hill said the deteriorating consumer downturn had not yet hit its recent growth, which has been boosted by Hull City's surprisingly strong start to the Premier League football season.

William Hill is acquiring an affiliate marketing business, customer services operation, gaming brands and websites from Playtech, the online gaming software provider listed on the Alternative Investment market. The bookmaker has also signed a five-year software licence agreement with Playtech for poker and casino, with the option to move into other product areas.

Ralph Topping, William Hill's chief executive, described the "deferred acquisition" as a "transformational step". He added: "It makes us Europe's number one [online] sports and gaming provider measured by profitability."

The combination of its current operations with Playtech's assets will create a new entity, William Hill Online, which William Hill will control and operate as a subsidiary.

For the year to 31 December 2008, on a pro forma basis, William Hill Online is expected to deliver net revenues of £190m and earnings before interest, tax and amortisation of £75m. William Hill is giving Playtech a 29 per cent stake in William Hill Online, but the bookmaker has an option to acquire its shareholding in four to six years' time.

William Hill on Monday announced it gained 14 percent, adding 80 million pounds ($137 million) to its market value, the largest gain since 2002.

The bookmaker said it ``remains comfortable'' with analysts' profit estimates. Monday's gain in the stock was also helped by an agreement for Playtech Ltd. to supply casino, poker and other gaming software products from January in return for 29 percent of earnings from the bookmaker's online unit. William Hill advanced 23 pence to 189.5 pence. Playtech climbed 14 pence, or 3.8 percent, to 380 pence.

``Underlying trading has been good,'' Evolution analyst Nigel Parson said today in an e-mailed note. The Playtech accord ``will not be transformational to earnings, but will bring in- house an experienced marketing team.'' Parson raised his rating on the bookmaker's shares to ``buy'' from ``reduce.''

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Jagajeet Chiba, Gambling911.com

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