William Hill Investors Balk at Proposed Amaya Merger

Might PokerStars and its parent company, Canada’s Amaya, Inc., be a company too large and too mature to easily acquire?  That possibility looms broadly as prominent investors in William Hill have publicly pushed back against the possible “merger of equals” between the European bookmaking giant and the online-poker mammoth.

William Hill PokerThe discord among the largest Hills players increases the possibility that another suitor might be found to join forces with Amaya.  Besides William Hill, GVC Holdings was also reported to have made an undisclosed offer for Amaya, which would raise the possibility of one-time fierce rivals PokerStars and PartyPoker (now owned and operated by GVC) coming together under one roof.

And, as previously noted, former PokerStars owner Isai Scheinberg has also been rumored to have been in preliminary talks about reacquiring the firm he led to market supremacy last decade.  Those talks — if, indeed, they occurred — appear to have been last serious, and contain a caveat that would likely mean a hit to Amaya’s long-term growth prospects: Any return to the helm by the Scheinberg family would seem to trigger a withdrawal from the US market, where the Amaya-led version of the company has succeeded in establishing a small toehold, in New Jersey.

For several weeks, however, William Hill appeared to hold the inside track.  Hills and Amaya execs jointly issued a financial advisory a couple of weeks back, advising investors of the ongoing talks between the two companies.  However, the latest developments from inside the William Hill family suggest a cooling of the possible deal.  That deal is valued at about £4.6 billion (or about US $5 billion).

First it was major William Hill shareholder group Parvus Asset Management that lashed out against the deal.  Parvus currently owns 14.3% of William Hill, and the company’s execs came down hard in a letter sent to William Hill’s board, parts of which have subsequently become public.

“We strongly encourage that the board and management stops wasting valuable time and shareholder resources pursuing this value-destroying deal,” Parvus co-founders Mads Eg Gensmann and Edoardo Mercadante wrote.

“Instead,” the Parvus letter continued, “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.”

Speaking to Reuters on the topic, Parvus’s Gensmann cited current exchange rates among the many reasons the deal was good for Amaya but bad for William Hill.  Gensmann also claimed that online poker was the weakest of all online-gambling segments at the present time, and that the deal would allow Amaya to take advantage of William Hill’s “superior cash-flow structure” without providing similar benefits for William Hill.

“Effectively, you’re buying an overvalued asset using an undervalued currency,” Gensmann told Reuters.

Following the negative input from Parvus, William Hill’s own former CEO, Ralph Topping, offered similar thoughts.  Speaking to London’s Financial Times, Topping said, “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.”

Topping served for eight years as Hills’ CEO, leaving the company in 2014.

William Hill has continued its recent efforts to grow via acquisition after being shut out on several other possible recent hookups.  The venerable Hills empire has lost ground against its competitors in recent years, particularly in the online sector, and its interest in companies such as Amaya and 888 show nothing if not urgency toward correcting that shortcoming.

Amaya, for its part, disputed some of Parvus’s assertions about the proposed deal. According to an Amaya statement, “The Parvus letter contains inaccuracies that can be dispelled through reading Amaya’s public filings, which will attest to the high quality, consistent profitability and stable growth prospects of our business. Further comment on any potential agreement is best provided if there is a proposed transaction put forward by Amaya’s Board.”

Amaya and William Hill execs also confirmed that merger talks were continuing, despite the cold water splashed about this week.


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