Bookmaker in discussions with potential co-bidder GVC to buy Guernsey-based online rival with lucrative Australian operations
William Hill is considering a joint takeover of online rival Sportingbet that would see it cherry pick the Guernsey-based firm’s lucrative Australian operations and possibly its business in Spain.
Sportingbet, shirt sponsors of Wolverhampton Wanderers football club, had last year been in lengthy takeover discussions with William Hill’s closest competitor Ladbrokes. A deal could not be thrashed out, however, because of legal concerns about Sportingbet’s activities in unregulated markets.
Traditional high street bookmakers are racing to expand their online businesses to keep pace with liberalising markets around the world and technologic advances that are transforming the range of products offered to sports betting punters.
Shares in Sportingbet, which have been rising in recent months, closed up 7.25p at 51p following an announcement from William Hill on Wednesday. This values the business at £330m.
Sportingbet’s Australian business accounts for about half of the group’s revenues and the lion’s share of profits. Spain – a newly regulated online market – represents a further 14% of revenues. Other important territories include Greece, Germany and the UK.
In a statement to the stock market, William Hill said it was at the early stages of considering an offer for Sportingbet. It is in discussions with potential co-bidder GVC, an internet bookmaker listed on the junior AIM market which last year indirectly took over Sportingbet’s controversial Turkish business Superbahis.com. The Turkish authorities have said they regard this site’s activities as illegal.
William Hill said any offer would be substantially in cash with an element of GVC shares also forming part of the consideration. The betting shop group already has an internet joint venture with London-listed Playtech, called William Hill Online, though it is thought the acquisition of Sportingbet businesses would be held separately from that operation.
Founded in 1998 by Mark Blandford, who had previously run a small chain of betting shops, Sportingbet rapidly grew into one of the largest online gambling businesses in the world, acquiring a string of international rivals, many of which accepted bets from countries where internet bets were unregulated or even considered illegal.
With the acquisition of US-focused Paradise Poker in 2004, Sportingbet became one of the stock market’s fastest growing companies and, a year later, was valued at more than £1bn.
Its chairman, Peter Dicks, was arrested on a Louisiana state indictment in 2006 but charges were later dropped. However, by the autumn of that year, new US laws made it illegal for banks to process credit card payments for gambling, effectively wiping out much of Sportingbet’s revenues.
In March this year the firm paid the final instalment on a £21.3m fine to secure a non-prosecution agreement with Preet Bharara, the US attorney for the southern district of New York.
Despite a healthy earnings track record in recent years, Sportingbet’s shares have continued to be overshadowed by regulatory uncertainty in some markets.