Just days after discussions began on a potential “merger of equals” between British sports betting giant William Hill and PokerStars parent company Amaya, prominent William Hill investor Parvus explicitly announced its opposition to the deal.
William Hill is a London-based bookmaker which has operated continuously since 1934, while Amaya is a Toronto firm with several online gambling interests, including globally leading online poker platform PokerStars.
Earlier this week, executives for both companies issued a joint statement announcing that a “reverse takeover” of Amaya by William Hill was under discussion:
“Over recent months, the board of William Hill has been evaluating options to accelerate William Hill’s strategy of increasing diversification by growing its digital and international businesses. Amaya has been undertaking a review of its strategic alternatives since February 2016.
The potential merger would be consistent with the strategic objectives of both William Hill and Amaya and would create a clear international leader across online sports betting, poker and casino.”
As the statement notes, a merger between William Hill and Amaya would effectively create the world’s largest online gambling conglomerate.
William Hill maintains an internationally recognized sports betting brand, but has struggled to penetrate the online poker and casino gambling market. Conversely, with PokerStars as a flagship brand, Amaya’s dominance of online poker is assured, but the company has made little headway with its BetStars sports betting service.
On October 13th, one week to the day after the discussions were announced, one of William Hill’s primary investors stepped forward to squash the merger’s momentum.
Parvus Asset Management, a U.K.-based privately owned hedge fund valued at $4.5 billion, invested $460.1 million in March of 2014 to cover 14.3 percent of William Hill’s outstanding shares.
In an open letter issued to shareholders which was obtained by Reuters, Parvus cofounder Mads Eg Gensmann dismissed the deal as one which would ultimately “destroy shareholder value” due to “limited strategic logic.”
The open letter also included a rather direct rebuke from Gensmann as to the merits of combining Amaya’s assets, and liabilities, with those of William Hill:
“It shouldn’t take more than five minutes of the board’s time to realize this deal doesn’t pass the smell test … Effectively, you’re buying an overvalued asset using an undervalued currency.
We strongly encourage that the board and management stops wasting valuable time and shareholder resources pursuing this value-destroying deal.”
A spokesperson for William Hill countered with a statement outlining the potential merger’s strategic objectives, including enhanced synergy between resources and diversification of assets:
“It is premature for us to draw conclusions whilst this work is ongoing. The Board would not come forward with a transaction unless it was satisfied that it was in the interests of all shareholders.”
William Hill – currently without a permanent CEO after James Henderson’s ouster in July – rejected a $4.2 billion takeover bid from rival 888 Holdings and bingo operator Rank Group in August.
The bet shop is poised to lose its leading share of the sports betting market when the recent £2.3 billion merger between U.K.-based rivals Ladbrokes and Gala Coral Group is completed.
Amaya, meanwhile, is reviewing all options following the removal of its own CEO, after David Baazov resigned in August to address insider trading allegations.