After a major shareholder criticized the proposed plans, the William Hill and Amaya merger is on the rocks.
Industry insiders and analysts have been speculating as to what it could mean for the iGaming industry, since the news of a possible deal between William Hill and Amaya broke on October 9.
In the poker industry of today, a newly merger company would certainly become a power player, especially with Amaya owning the largest poker site in the world and William Hill being the biggest bookmaker in Europe.
By No Means a Done Deal
It’s by no means a done deal but a merger could certainly be a positive thing for the online poker players. Some media outlets have assumed that things were looking very positive, but Bloomberg’s analysts now contradicts these messages.
Bloomberg speculated that the risk for both parties would be too great, while citing PokerStars’ legal issues in Kentucky regarding player losses post -UIGEA and a potential debt of more than 3.4X EBITDA. According to Parvus Asset Management, the merger would “destroy shareholder value” and have “limited strategic value”.
“Ralph Topping, a former chief executive of William Hill, said he fully supported the assessment by Parvus and went so far as to tell the Financial Times that he is “worried” about the future of William Hill.”
Although it doesn’t have the power to block the deal, criticism coming from a former chief executive might be cause for concern. Unless it can be persuaded that there is an upside to a merger, Parvus could block any further negotiations as it own 14.3 percent of William Hill.
Need of a Deal for William Hill
It will be the second failed merger of 2016 for William Hill, if the talks lead to another breakdown. A deal by a consortium made up of 888 and Rank got rejected back in August. William’s board rejected the deal saying the amount offered was too low, although some suggested that this could have been a mutually beneficial deal.
In terms of market share, William Hill needs a deal to not fall behind the curve with newly formed operators start to find their shooting.