- Raising £1.7 billion of debt to finance William Hill International acquisition
- Transformational deal catapults it into top 3 position in UK, Spain
- Underlying trading in line with expectations
Online betting and gambling company 888 Holdings (888) said it expects to close the purchase of William Hill International on 1 July and was raising £1.7 billion of debt to help fund the deal.
In April 2022 the company raised £163 million of equity via a placing of new shares.
Based on trading over the twelve months to the end of February, the combined businesses generated £2.057 billion of revenues and £405 million of EBITDA (earnings before interest, taxes, depreciation, and amortization).
At the closing of the transaction, net debt to EBITDA, a measure of financial leverage, is expected to be 4.3 times. The group has a medium-term ambition to get leverage below three times.
TRADING IN LINE WITH EXPECTATIONS
For the six-months through June, 888 expects to report revenues between £330-335 million while the William Hill business is expected to generate revenues of between £620 million and £630 million.
The company said trading was in line with the board’s expectations with growth in some European markets offset by the impact of additional costs related to safer gambling measures and the temporary exit from the Netherlands.
The UK government is expected to publish the findings of its Gambling Review in coming weeks, which is likely to impact the company.
BUILDING SCALE
The acquisition of William Hill’s international businesses (excluding the US) has transformed the group.
The transaction catapults the group into third place in the UK with an estimated market share of 12%, behind leader Flutter (FLTR) which has 30% and Entain (ENT) which has 17% through its ownership of Coral and Ladbrokes.
The combined group will also have a top three position in Spain and top five position in Italy.
Increased scale will provide the group with better opportunities to increase operating margins, while it has also targeted £100 million of cost synergies expected by 2025.
The global gambling market is estimated to be worth around $408 billion and the EMEA (Europe, Middle East and Africa) market is expected to grow at a compound annual growth rate of 12.4% between 2020 and 2026.
