Online gaming services developer Playtech Cyprus Ltd. (LSE:PTEC) announced that UK bookmaker William Hill Plc (LSE: WMH) will exercise its call option to acquire Playtech's 29% stake in William Hill Online.
Playtech said that following completion of the valuation process, its stake will be acquired for about £424 million, representing a multiple of about 11.5 times normalized 2012 EBITDA. Playtech added that it will continue to be entitled to a proportionate share of William Hill Online's profits until the date of the deal's completion. Playtech chose to receive the proceeds of the deal entirely in cash and William Hill is committed to complete the acquisition by the end of April 2013.
The analysts' consensus was that Playtech would make £409 million on the sale of its stake in William Hill Online.
William Hill Online was formed in December 2008 when Playtech injected assets then worth £177.7 million into William Hill's existing interactive operations. William Hill Online has since grown into one of the world's leading online gaming operators, consistently returning annual double-digit growth. Through December 31 2012, Playtech's total share of profits of William Hill Online (excluding software royalties) was about £140 million.
Playtech, whose controlling shareholder is Teddy Sagi, said that software arrangements with William Hill Online will continue following completion of the call option. William Hill Online has been a key driver of William Hill's overall success and, as the major technology supplier to it, Playtech maintainins a close working relationship to support William Hill Online's continued growth, and looks forward to benefiting from its future success.
Playtech said that it is undertaking a broad review of the most effective use of the proceeds from the deal, and will take into account feedback from shareholders and the company's requirements for the future. The Board will, among other things, assess the potential for further acquisitions, joint ventures and partnerships, with a focus on regulated markets, together with the possibility of a return of capital to shareholders.
Playtech CEO Mor Weizer said, "William Hill Online has been an overwhelming success and has delivered a cash return to Playtech greater than 3.5 times its original investment, excluding software royalties in the four years since inception. The success demonstrates the potential to create value by combining a well-established brand with Playtech's best of breed technologies, products and services."
Published by Globes [online], Israel business news - www.globes-online.com - on March 3, 2013
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