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William Hill Biggest Gains Since 2002

Written by:
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Published on:
Oct/20/2008

(Bloomberg) - William Hill Plc, the U.K.'s second- biggest bookmaker, rose the most since a 2002 initial public offer in London trading after saying a slowing economy hasn't hurt business, and expanding its online gambling unit.

William Hill gained as much as 24 percent, the steepest intraday gain since the London-based company sold shares to the public in June 2002. So-called gross win, or revenue less money paid out to winning customers, increased 9 percent in the 15 weeks ended Oct. 14, the company said today in a statement.

The bookmaker said it ``remains comfortable'' with analysts' profit estimates. Concern that a weakening economy may lead to a drop in winnings caused William Hill shares to slide 32 percent in the last two weeks. Today'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.

``Underlying trading has been good,'' Evolution analyst Nigel Parson said today in an e-mailed note. The Playtech deal ``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.''

William Hill advanced as much as 40 pence to 206.5 pence and traded at 194.75 pence as of 10:33 a.m. local time. Playtech climbed 22 pence, or 6 percent, to 388 pence.

`In a Hurry'

William Hill was ``in a hurry'' to grow online and had been in discussions with Playtech ``for the last five months,'' Chief Executive Officer Ralph Topping said on a conference call.

The acquisition of the Playtech units will be completed by January and William Hill will have the option of buying Playtech's share of its online division in 2013 and in 2015.

``We looked at growing the business ourselves, we looked at paying for services and we came up with the option of acquiring services,'' Topping said on the call.

William Hill aims to become one of the top four European sports betting Web sites by number of users in the next three years, the CEO said in June. The bookmaker gets about a tenth of winnings from its online unit and said in February the performance of its interactive business would be hurt until a new computer platform was fully up and running toward the end of this year.

Gross win at the company's betting shops rose 10 percent in the latest 15-week period, William Hill said today. Winnings from bets placed over the counter increased 7 percent, helped by favorable sports results, while gaming machines increased their gross win by 14 percent, according to the statement.

The online division's gross win increased 21 percent, though the telephone betting unit had a 30 percent decline because of wins by some of its higher-spending clients.

Overall growth ``represented a good performance, albeit against weak comparatives in the prior year,'' William Hill said.

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