Two hedge funds have criticized the William Hill board for failing to disclose “potentially relevant” information about the US casino giant Caesars’ acquisition of the British sportsbook.
The two hedge funds are also understood to ask William Hill shareholders for a second vote on the £ 2.9bn deal which is expected to close in early April.
Ahead of Wednesday’s court hearing that is scheduled to approve the transaction, GWM Asset Management and HBK Capital Management have written separate letters to the bookmaker’s board, arguing that they were not presented with enough information to green light the acquisition. in the November shareholders’ vote.
In the GWM letter, which was obtained by the Financial times, the hedge fund said the William Hill board had not disclosed information “Potentially relevant” on the possibility that Caesars could terminate its joint venture with the British gaming company in the US if another party expressed an interest in buying William Hill.
UK operator formed a sports betting joint venture with the former Eldorado Resorts in the summer of 2018 following a landmark US Supreme Court decision that paved the way for the legalization of gambling across the country. The partnership remained valid after Eldorado acquired Caesars last summer in a reverse acquisition.
Insufficient information on Caesars’ restricted acquirer list
When Caesars submitted its bid for William Hill in September 2020, the casino operator said it could exercise its right to terminate its joint venture with the bookmaker if it accepted a rival bid from a list of “Restricted acquirers” that Caesars could decide.
In its recent letter to the bookmaker’s board, HBK, which has a 10% stake in the book, said that the market was wrongly led to believe that “no rival bid for William Hill would be possible.”
HBK went on to say that William Hill did not reveal until the day of the November shareholders’ vote that Caesars I could only add six names to that list and that he could only replace one of those potential bidders every six months.
GWM, which owns a 1% stake in William Hill, said in its letter that it intended to challenge the transaction because it was “contrary to the spirit of the UK procurement code.” The hedge fund further noted that it may have voted differently in November and that the terms of the Caesars deal prevented possible action for the British sportsbook that could have resulted in it being sold at a higher price.
It is understood that other shareholders have also raised concerns about the deal to the UK operator’s board and that none of them voted at the November shareholders meeting.
Caesars offers William Hill securities to 272 pence per share. However, gambling stocks have risen significantly since the deal was first agreed due to the rapid expansion of the US sports betting market and the rebound in online gambling that has caused the widespread blockades.
Source: Hedge funds attacked William Hill for not disclosing about the acquisition, The Financial Times, March 30, 2021