Author: Anton Johan
In the cut-throat world of land and online gambling, money talks while
everything else walks. Nothing has made this point clearer than the quest to
acquire highly successful Australian gambling operator Sportingbet, which
appears to be on the cusp of being sold to UK gambling powerhouse, William Hill.
The Sportingbet acquisition saga started over a year ago, when it made
known that it was available to be bought. And one of the first interested
parties was leading UK land and online gambling firm Ladbrokes, which recognised
the potential of acquiring Sportingbet's highly lucrative Australian live
betting operation, and, as an added bonus, the chance to 'put one over' it
fiercest rival, William Hill.
However, Ladbrokes ended up breaking off talks with Sportingbet on account of
the latter's involvement in the unregulated Turkish online gambling market. It
seems the UK firm was somewhat worried about a potential backlash down the line
because of the illegal status of online gambling in Turkey.
Sportingbet Sold its Turkish Interests
As a result of the 'Turkish issue,' Sportingbet subsequently sold off its
Turkish interest, presumably to prevent another potential buyer from being
Fast forward one year, and enter William Hill, the biggest gambling operator in
the UK and a firm just as eager stick it to its rival Ladbrokes. Keen to acquire
Sportingbet, William Hill - along with junior partner GVC Holdings - offered to
buy the Aussie firm for £350 million (52.2 per share) earlier this month
(Interestingly, GVC Holdings, a AIM-listed B2B and B2C online betting and gaming
services provider, is the same company that bought Sportingbet's Turkish online
gambling interests last year for £113 million.)
Will Hill and GVC Back to Drawing Board
However, Sportingbet turned down Sportingbet's offer out of hand, saying that it
vastly undervalued the firm. Undeterred, William Hill and GVC immediately went
back to the drawing boar to put together another slightly more generous offer,
which was also promptly turned down by the Australian gambling giant.
Still undeterred, William Hill and GVC presented their latest and much-improved
offer this week, comprising 48.9p in cash, a 1.1p dividend and 11p in GVC paper
for every Sportingbet share, in a deal collectively worth £530 million.
Fortunately for Will Hill and GVC, Sportingbet appears to like this offer, as it
has indicated that it will present the offer to its shareholders, with a view of
generating a formal offer. As such, William Hill and GVC have until November 13
to make a firm bid.
Stakes May Now be too High for Ladbrokes
Until then, though, any other firm with equally deep pockets is free to snap up
the Aussie firm. Unfortunately for Ladbrokes, the stakes may now be too high at
this point to get involved, which means they'll likely have to sit back and
watch their long-standing rivals outgrow them even further.
Add to that, that
any other potential purchasers may find it very hard to match the William
Hill and GVC partnership. Because while Will Hill will manage all of
Sportingbet's 'legitimate' operations, GVC will take on all of the firm's
unregulated or 'grey' online gambling operations, in what can only be described
as 'symbiotic symmetry.'
If this Sportingbet acquisition deal goes through, expect William Hill to
become the unstoppable force in the land and online gambling industries that its
directors and shareholders are hoping it will be.
Posted by Anton Johan at 13:00 on 17 October 2012