by Renee Israel
Top UK bookmaker, William Hill, has until next month to decide whether to
activate a call option to purchase Playtech's 29% stake in their joint William
Hill Online venture.
The fact that William Hill has called Playtech's share option means that it
has already started the process of valuing Playtech's stake in what has proved
to be a highly lucrative venture.
In fact, according to industry analysts, Playtech's almost 30% stake in the
William Hill Playtech online gambling venture is likely valued at between
£300 million and £493 million.
As a result, both firms will appoint banks to determine a fair price for the
29% stake, and a third party may be brought in if the estimates are too far
apart to bridge in the first step.
Analyst for Deutsche Bank, Richard Carter said: "I think it's likely William
Hill would issue some equity to raise money as I don't think they want to take
on more debt in order to acquire lots more online earnings than their retail
William Hill and Playtech Joint Venture
William Hill and Playtech entered into the successful joint venture in order
to create a powerful online gambling platform.
However the relationship has been tumultuous at times, including staff
walkouts in offices in Bulgaria and Tel Aviv, and the need for Ralph Topping,
CEO of William Hill to fly out to these offices in order to restore order.
Since these rather bizarre events last autumn, William Hill and Playtech have
maintained a cordial and professional relationship, however it is no secret that
William Hill wants full control over its fastest and more profitable division
and is keen to end Playtech's veto over areas such as acquisitions.
William Hill is also bothered by Playtech's desire to work directly with its
high-street rival, Ladbrokes
Last year, Will Hill was forced to take an injunction out to prevent Playtech
from selling its stake in the online gambling venture. Playtech has flexed its
own muscles by vetoing against William Hill's plans to purchase mobile betting
William Hill 3rd Quarter Trade Figures
On Friday, William Hill released its third quarter trade
figures, showing that operating profit from its online division climbed 42%
during the three months leading to September 25th.
Online numbers were boosted by wagering on the European football
championships, as well as the London Olympics, however these sporting events
impacted retail in a less positive way.
"The Olympics and Paralympics captured the public's attention but appear to
have reduced customer visits in retail," said Ralph Topping.