Less than two weeks ago, William Hill and Amaya Gaming confirmed rumors that they were discussing a potential merger. A so-called “merger of equals” would have actually been classified as a reverse takeover, as the smaller company, William Hill, would technically acquire the larger, Amaya. On Tuesday, both companies announced that the talks have ended and no deal will be made.
The writing appeared to be on the wall Thursday night when Parvus Asset Management, William Hill’s largest shareholder, controlling 14.3 percent of the company, sent an open letter to William Hill’s board panning the proposal. William Hill chairman Gareth Davis and interim chief executive Philip Bowcock met with Parvus co-founders Mads Eg Gensmann and Edoardo Mercadante a couple days earlier, but when Davis and Bowcock did not buy the Parvus duo’s reasoning for their dislike of the deal, Eg Gensmann and Mercadante took their concerns straight to the Board.
“We strongly encourage that the board and management stops wasting valuable time and shareholder resources pursuing this value-destroying deal,” they wrote.
“Instead the board and management must focus on maximising value for William Hill owners, rather than Amaya shareholders, by considering all alternative options available, including a sale of William Hill.”
Eg Gensmann elaborated to Reuters, saying that two major concerns were exchange rates that favored Amaya and that William Hill’s cash flow situation was better than Amaya’s. He felt that William Hill strengthening its poker business was not nearly as significant as Amaya strengthening its sports betting business.
“Effectively, you’re buying an overvalued asset using an undervalued currency,” he said.
Former William Hill CEO Ralph Topping backed Parvus, telling the Financial Times, “I fully support what Parvus are doing, because they are good people. When this deal was announced I was left scratching my head. Both [Amaya and William Hill] have a lot to sort out in their own business. I’m very anxious on the future of William Hill.”
In a press release, William Hill did mention the discussions with Parvus Asset Management:
At the time of the announcement on 10 October 2016, various exploratory due diligence and other workstreams were underway but far from complete. After canvassing views from a number of William Hill’s major shareholders, the Board has decided that it will not pursue discussions with Amaya. Accordingly, the Board has informed Amaya that it is withdrawing from discussions and wishes Amaya well for the future.
The Group has continued to focus on the four priorities set out by Interim CEO Philip Bowcock – online, technology, efficiencies and international – to deliver value for shareholders and will also continue to consider strategic alternatives where they have the potential to create shareholder value.
While it sounds like it was William Hill that nixed the deal, Amaya Chairman Divyesh (Dave) Gadhia provided the usual generic spin, saying in a press release, “Amaya is a strong and growing company with experienced management and a proven strategy to deliver profitable growth and shareholder value. Together with our financial advisors, we evaluated a wide range of strategic alternatives to maximize shareholder value and have concluded that remaining an independent company is in the best interest of Amaya’s shareholders at this time. The Board has full faith in Amaya’s management to execute on its strategy and objectives.”
