William Hill set to acquire Mr Green in £242m deal

William Hill set to acquire Mr Green in £242m deal

Wednesday, October 31, 2018 Posted by News Team
Deal
Mr Green board has announced support for the bid

William Hill has made a recommended cash operator to acquire Scandinavian operator Mr Green & Co (MRG) in a deal that values the business at £242m.

The offer amounts to a price of SEK69 per MRG share, with its board of directors unanimously recommending that shareholders accept the bid.

William Hill said the acquisition would allow it create a business with an enlarged European footprint, especially in faster-growing online betting and gaming markets, supported by its existing UK-facing online and retail businesses and US operations.

By acquiring an online-only business, William Hill said, it would be able to reduce its exposure to the UK market and increase its share of online and international revenue and profits. 

The operator estimates that based on each company’s results for the first six months of 2018, 47% of combined revenue, excluding William Hill US, would come from iGaming, while international revenue would increase to 21%. It believes that MRG’s Mr Green and Redbet brands would complement the William Hill brand, and allow it to pursue a multi-brand strategy in certain markets. 

William Hill also highlighted MRG’s high growth potential, with the business achieving a compound annual growth rate of 23% between 2015 and 2017. MRG’s recent trading has also remained robust, with revenue increasing 51% year-on-year in Q3 2018. It also noted that the combined business would be able to take a leading role in sustainability and social responsibility. 

"This proposed acquisition accelerates the diversification of William Hill - immediately making us a more digital and more international business,” William Hill chief executive Philip Bowcock said. “MRG will provide William Hill with an international hub in Malta with market entry expertise and strong growth momentum in a number of European countries. 

“William Hill will move from a single brand to a suite of brands that can maximise growth opportunities moving forward in new and existing markets.”

The SEK69 per share purchase price represents a 48.5% premium on MRG’s closing price of SEK46.5 per share on the Nasdaq Stockholm exchange on October 30th. It is also a premium of 61.7% compared to the volume-weighted average share price of SEK42.7 during the last 30 days up to October 30th. 

The MRG board of directors, comprising Henrik Bergquist, Hans Fajerson, Fredrik Sidfalk, Martin Trollborg, Karl Trollborg, Tommy Trollborg and Anita Trollborg, hold 40.04% of the company’s issued shares. 

William Hill has proposed that its chief digital officer Ulrik Bengtsson, formerly chief executive of Betsson Group, will be responsible for overseeing the integration of MRG into the business. The operator noted that it would not make any material changes to MRG’s employees, management, organisation or operations until the acquisition was completed. 

Once the deal was finalised, it said, a review of the business and the requirements of the enlarged group would be carried out. 

William Hill expects the transaction to enhance earnings from the first full year of ownership before synergy benefits which will amount to around £6m per annum by the third full year following the acquisition. 

Funding for the acquisition is to come from cash in hand or through existing credit facilities.

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