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Merger talks collapsed between William Hil and Caesars

The Brittish press has revealed that William Hill, leading UK’s gambling operator, has held talks last year with Caesars Entertainment, America’s biggest casino owner, about a £6bn merger. The negotiations for the deal, which would have seen the FTSE 250 bookmaker swallowed up by Caesars Entertainment, ultimately failed last autumn over a disagreement on price.

A potential “a cash-and-shares deal” would have seen the US casino giant take over the British bookmaker to create a £6 billion gambling powerhouse with formidable geographical presence and an excellent position in the newly liberalized US sports betting market.

News of the talks, however, is likely to revive speculation that William Hill could become a takeover target. Also, Caesars, the owner of the flagship Caesars Palace casino and hotel in Las Vegas, is now reported to be in the early stages of exploring a merger with Eldorado Resorts, which owns 20% of William Hill’s American business. This is prompting speculation that a future relationship between Caesars and the British company is not out of the question.

William Hill is the operator of the second largest chain of betting shops in the UK. The company has already been struggling with ailing profitability, as its digital operation failed to pick up the momentum that its competitors in the field did gain. The company’s shares have plummeted since the announcement of the pre-tax loss of £722 million for 2018, down from a £146.5 million profit in the prior year.

2019 sets up to be even more difficult after the UK Government implemented on April 1 a reduction of the maximum bet on the fixed-odds betting terminals (FOBT) from £100 to just £2. The move will hit operators’ profitability significantly and is expected to result in betting shop closures and job losses.

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