Scientific Games Settles With William Hill Over NYX Gaming Acquisition
Scientific Games and William Hill have jointly announced a deal which has resulted in William Hill dropping its efforts to block SciGames’ acquisition of software platform provider NYX Gaming. The deal, announced late on Wednesday, calls for William Hill to withdraw from legal and corporate actions taken against NYX Gaming (in which William Hill currently owns a large minority stake) in both the United States and the United Kingdom.
Scientific Games and NYX will also drop their own corporate actions against William Hill, and all parties involved have agreed to recommend to all other NYX shareholders to vote in favor of the SciGames pickup of NYX. That shareholder vote was originally scheduled for today, but was shoved back to December 20th as negotiations continued.
William Hill had threatened to put together a majority ownership bloc to torpedo the deal, unless Scientific Games and NYS sweetened the deal, paying a significant premium over the offer made for NYX a few months back. Given that the SciGames offer already represented a significant premium over NYX’s share price at the time the offer was made, scuttling the offer would have cost William Hill itself at least $50 million, and perhaps even more.
Through its own holdings and convertible options, William Hill controls roughly 32% of NYX Gaming’s stock. That gave the Hills threat at least the air of plausibility. In response, Scientific Games acquired two large blocs of NYX stock from other corporate interests, including one held by The Stars Group. Those acquisitions gave SciGames itself a nearly 40% interest in NYX, and effectively neutered the William Hill threat.
Named as no longer opposing Scientific Games takeover of NYX Gaming, per a SciGames statement are two William Hill entities, William Hill Steeplechase Limited and William Hill Plc, plus a third holdings company, AlpInvest Partners CoInvestments.
It is not readily apparent that William Hill was able to extract any premium in exchange for dropping its opposition. A brief statement published on William Hill’s corporate site notes, “In connection with the proposed acquisition Scientific Games has agreed to acquire William Hill’s ordinary shares and convertible preference shares in NYX with William Hill receiving CAN$2.40 a share for the 6.8 million ordinary shares it owns in NYX and circa £87m for its convertible preference shares.” That CAD $2.40 per share price is the same figure offered in Scientific Games’ original bid, made back in September.
William Hill’s CEO, Philip Bowcock, offered a quote on other aspects of yesterday’s deal, in which William Hill does appear to have retained some intellectual-property interest. Said Bowcock, “These agreements safeguard William Hill’s technology roadmap and relationship with NYX and end all legal action between the parties. Additionally we are pleased to expand our commercial relationship with Scientific Games in the US market which offers considerable potential should the Supreme Court ruling on PASPA, which is expected next year, provide states with the power to regulate sports betting. We will unconditionally support Scientific Games in their acquisition of NYX and we have no hesitation in recommending other shareholders to do the same.”
That PASPA reference is key. NYX is one of the hottest software developers in the online market, offering its services and products to many of the industry’s largest operators. Among them is a cutting-edge sports-betting platform, OpenBet, which is likely to draw plenty of operator interest as a software solution if the US’s nearly nationwide ban on sports betting is struck down. Earlier this week, the US Supreme Court held oral hearings on the US state of New Jersey’s challenge to PASPA, and even if that effort fails, PASPA’s days appear numbered.
All that puts NYX in a position that appears rosier by the day. Whether it’s 2018 or a couple more years down the road, the company’s products are ideally situated to take advantage of a newly expanding market.