December 4, 2012 6:13 pm

William Hill cuts Sportingbet offer

Sportingbet has agreed to a 5p a share reduction in William Hill and GVC Holding’s offer for the online gambling company, following a day of brinkmanship in takeover talks.

The new terms – reached as the 5pm “put up or shut up” deadline for a deal grew closer – mean that the joint cash and shares bid will be worth £485m, compared with the £530m previously offered. The parties have agreed a further two-week extension for William Hill and GVC to finalise an agreed offer.

William Hill and Sportingbet held talks about a revised offer over the weekend, after Sportingbet announced last week that it had suffered a 35 per cent fall in first-quarter revenues.

However, the new deal is being made more palatable to Sportingbet shareholders as company founder Mark Blandford, and other shareholders who collectively hold 11.2 per cent of the shares, have said they are willing to take up the maximum amount of GVC shares being made available.

This means the remaining shareholders will be able to take advantage of the cash component of the deal, at 50.4p a share.

People close to the situation said the reduced offer was a reflection of lower earnings now expected following Sportingbet’s trading update, but added there was no prospect of any further chipping away at the offer price.

A regulatory statement issued by Sportingbet on behalf of the three parties said: “William Hill and GVC will not increase or reduce the value of the revised proposal unless a third party announces a firm or possible intention to make an offer for Sportingbet.”

Some Sportingbet shareholders had initially expressed reservations about the paper element of the joint William Hill-GVC deal.

According to people familiar with the discussions, the Sportingbet board told William Hill that it needed to extract early undertakings from Mr Blandford and his fellow shareholders to take GVC paper in order to get its new offer over the line.

In September, William Hill and GVC had initially offered 52.5p a share for Sportingbet, which the company’s board turned down, leading to a revised offer of 61.1p in October.

Sportingbet shares closed on Tuesday at 47.5p before the announcement of the latest revised offer, up 3.5p on the day.

The new offer represents an 28 per cent premium on the Sportingbet share price on September 19 when the William Hill/GVC interest became public.

For William Hill, Sportingbet’s Australian business represents an opportunity to make inroads in an international market, free from the regulatory problems that exist in several parts of Europe.

On Tuesday, William Hill announced that it was pulling out of the Greek market, which had been generating operating profit of £4m-£5m a year for the group.

William Hill shares closed up 1.5p on Tuesday at 339.8p.

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