Business Irish

Sunday 25 June 2017

William Hill is left chasing the field as tie-ups reshape sector

Robert Winston on Evanescent wins the 2013 Irish Yearling Sales Handicap Stakes at the William Hill Ayr Gold Cup Festival at Ayr racecourse in Scotland.
Robert Winston on Evanescent wins the 2013 Irish Yearling Sales Handicap Stakes at the William Hill Ayr Gold Cup Festival at Ayr racecourse in Scotland.

Neil Maidment

William Hill began the year as Britain's biggest bookmaker but a series of mergers is pushing it down the pecking order and putting it under pressure to react.

Driven by tighter regulation and tax pressures that are taking chunks out of profits, big betting names Ladbrokes and Gala Coral are combining, as are Betfair and Ireland's Paddy Power.

Online gambling firm GVC also agreed a £1.1bn (€1.5bn) deal for larger rival Bwin.Party this month - with the same factors fuelling consolidation.

The larger companies can divert savings into higher marketing spend and potentially offer a wider array of improved products to gamblers on smart phones and tablets. Smaller rivals are then squeezed out and these new groups' lower costs, enhanced market share and larger revenues all help to soften bigger tax charges.

High street shops where gamblers can bet on horse or greyhound racing have been a feature of British and Irish towns since the 1960s. Betting "in play" on televised football matches has also attracted a younger generation of tech-savy sports fans as the gambling scene has moved online.

William Hill grasped these trends before rivals but now appears to have ground to make up.

"William Hill could benefit from a potential partnering up with another operator, now it has more credible competition coming. But it's hard to see exactly who," HSBC analysts said.

Led by CEO James Henderson, a 30-year company insider who replaced veteran Ralph Topping last year, it was William Hill who made one of the first moves of 2015, tabling a £720m bid for online gambling firm 888.

That deal collapsed but the M&A wave since has narrowed the field, including the removal of Betfair, which analysts had tipped as a fit.

For William Hill, 888 remains the obvious choice. The firm has a market capitalisation five times smaller than William Hill's and would add leading technology, strong casino and bingo positions and a lot of cost synergies to its arsenal, analysts say.

The only other big player is Bet365, it is likely too expensive and has an exposure to unregulated markets William Hill wants to avoid. (Reuters)

Irish Independent

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