Playtech Reveal Failed Plans for £700m Acquisition of 888 Holdings
There have been reports in the British press that Playtech attempted to acquire 888 Holdings, the parent company of William Hill. In July, Playtech made an indicative proposal to purchase 888 Holdings at a rate of 156p per share, amounting to a total offer of approximately £700m ($886.8m). However, the offer was rejected.
Decline in 888’s Performance
The decision of 888 to decline the offer came amidst a period of financial instability. The company had acquired William Hill in July 2022, following a period of high stock prices. However, this acquisition did not prevent a decline in revenues.
The third quarter of 2023 saw a 10% drop in revenue compared to the same period the previous year. This downturn took place despite the appointment of a new CEO in July, who took over following Itai Pazner’s departure in January. The company was also dealing with the consequences of anti-money laundering issues in the Middle East.
Entanglement with Deferred Prosecution Agreement
The attempt to acquire 888 Holdings became public knowledge through a deferred prosecution agreement (DPA) linked to bribery allegations surrounding a Turkish operation owned by Entain, formerly known as GVC. This DPA casts a shadow over 888 due to the involvement of former GVC Chief Executive Kenny Alexander, who is now a significant shareholder in 888.
Since rejecting Playtech’s offer, 888’s shares have fallen, increasing pressure on Lord Mendelsohn, the chair of 888’s board. Additionally, 888 was in preliminary discussions about a merger with DraftKings, but this too was not pursued.
Playtech’s Own Challenges
While Playtech’s offer might have seemed like a potential solution for 888’s struggles, Playtech has also faced its own challenges. The company has seen a decline in recent years and has not succeeded in its own acquisition efforts. Notably, Playtech’s attempt to be acquired by Aristocrat last year did not materialize. The proposed merger, valued at £2.1bn with a per-share price of £6.80, was ultimately rejected as only 56% of Playtech shareholders supported it, falling short of the required 75% approval.