William Hill Casino Acquires Parts of Playtech Software
William Hill is now declaring publicly that they are the top online gaming and sports betting company in the whole of Europe, following the agreement that it entered into with gambling software provider Playtech.
The deal consists of a licensing collaboration, along with an agreement for William Hill to acquire Playtech’s all other affiliates and assets. This move by William Hill, touted as UK’s second biggest bookmaker, is considered as an effort to address its weak spot – online gambling – by setting up the joint entity William Hill Online (WHO). The resulting entity will utilize Playtech as the provider for William Hill’s poker and casino software requirements. Playtech snatched the contract from Cryptologic.
Playtech has also acquired Uniplay, an affiliate, on very reasonable terms in order to provide a host of customer service operations. The deal includes a number of gaming brands and websites for a price tag of £144.5m in cold cash. Most of these assets are held in WHO.
In turn, Playtech will gain from the agreement via a 29-percent interest and as much share in the profits of WHO. Playtech also has the option to increase its stake to 32 percent, but William Hill retains the option to buy out Playtech after four or six years.
According to William Hill, the Orbis technology platform that it will use for developing its online sports betting business is on schedule to be launched next month. Projections pegged WHO’s 2008 net revenues at £190m before interest, tax and the £75m amortization.
Heads are moving, too. Henry Birch, former chief executive of Leisure & Gaming, has jumped on board as head of WHO.
Industry watchers are optimistic about the deal, noting that Playtech was in need of cash outlay amounting to £24m to service its contract with William Hill. In return, the deal will boost its credit standing and help the developer to refinance £1.2bn worth of debts that are scheduled to come due in 16 months.
Playtech and William Hill suffered setbacks last week. Despite this, the deal drew positive feedback, with William Hill rising from 23p to 189 ½ p and Playtech jumping by 14p from 380p.
William Hill chief executive Ralph Topping stated that the company is now among the top three companies in the European gaming and betting industry based on revenues, and the first in terms of profitability. He added that they project a 50-percent increase in revenues in the next two years.
Playtech chief executive Mor Weizer said that it is now generating royalty fees from its online poker and casino businesses from William Hill starting 2010, on top of the income that it enjoys out of the WHO shares and software licensing deal.
When asked whether they see the relationship going further, both camps declined to comment in detail. Mr. Topping said that the possibility of a merger has not been discussed neither formally nor informally.
Mr. Weizer also emphatically declared that Playtech would not actively participate in running the William Hill Online operations. “We continue with our core business as it is today and we have a call option for other companies. I can’t see how [a merger] will happen,” he added.
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Acquiring the parts of Playtech software with william hill an added interface features that will benefit the players.