888 Holdings, a leading online gambling group, is set to initiate a significant equity raise to support its acquisition of William Hill’s non-US operations. This strategic move marks a notable occurrence in the London market, especially since the geopolitical tensions initiated by Russia’s invasion of Ukraine.
The company is expected to make an official announcement on Thursday morning, following the release of its annual results last month. The equity raise will be conducted through an accelerated bookbuild process, a method that facilitates a faster implementation compared to the traditional rights issue approach. This allows 888 Holdings to swiftly secure the necessary funds to complete the acquisition.
However, the path has not been entirely smooth. Since the announcement of the £2.2 billion takeover of William Hill International last September, 888’s share prices have seen a significant decline. As of Wednesday’s closing, 888’s shares were priced at 192p, resulting in a market capitalization of £777 million. This decline means that 888 will need to issue a substantially higher number of shares to achieve the same financial target that would have been met seven months ago.
Despite these challenges, 888 Holdings remains committed to raising approximately £500 million through the issuance of new shares. The company has communicated to its investors the strategic benefits of the deal, highlighting the creation of a more diversified revenue base across various countries. With this acquisition, 888 will secure leading positions in the UK, Italy, and Spain. Executives have emphasized that the synergy between the two companies is compelling: William Hill brings robust expertise in sports betting, while 888 has a strong presence in online casino and poker.
This merger is expected to enhance the market position of 888 Holdings, combining the strengths of both companies to offer a comprehensive range of gambling services. The integration is anticipated to create significant value for shareholders by leveraging the complementary nature of their operations.
To facilitate this equity raise, JP Morgan and Morgan Stanley, two prominent US investment banks, are collaborating with 888 Holdings. Despite the complexities and market conditions, the company remains optimistic about the strategic merits of the acquisition and its potential to drive long-term growth.
The successful completion of this equity raise and subsequent acquisition will mark a transformative phase for 888 Holdings. It will position the company as a formidable player in the global gambling industry, capable of leveraging diverse market opportunities and enhancing its competitive edge.
In summary, the equity raise by 888 Holdings to fund the William Hill acquisition underscores a significant strategic initiative aimed at broadening its market presence and enhancing its service portfolio. By overcoming market fluctuations and securing investor confidence, 888 Holdings is poised to achieve a milestone in its growth trajectory, promising substantial benefits for its stakeholders.
