UK William Hill Acquisition of Mr. Green Co, a Proactive Move to Alleviate Potential Effects of Brexit Ratification
UK William Hill intends to expand its international gambling operations by acquiring Stockholm-listed Mr. Green & Co. AB (MRG). In light of the pending ratification of UK’s separation from the European Union (a.k.a. Brexit), acquisition of the Swedish online operator, will allow W.Hill to strengthen its digital operations and European presence. Merging with MRG’s Mr. Green and Red Bet Casino brands will likewise diminish the UK gambling firm’s dependence on the British market.
UK’s tightening industry regulations and pending tax increases, may after all, create unfavorable financial impact. Offer documents were made public last October 2018. W.Hill put forward an offer to buy MRG for SEK2.82 Billion; pegging the Swedish operator’s stocks at SEK 69 per share. SEK 2.82 is equivalent to £242 Million, €271 Million or $304 Million. The SEK 69 per share offer is nearly 49% higher than MRG’s closing price of SEK 46.5 at point of agreement. MRG Board Members and shareholders owning 40.4% of the company’s shares of stock, recommended acceptance of the proposed acquisition.
The offer though is still conditional and will push through only if the UK gambling giant acquires 90% of Mr. Green Co & AB’s stocks. Doing so will empower W.Hill to immediately delist the prominent Swedish online gambling operator from NASDAQ-Stockholm. Although W.Hill initially stipulated acceptance period to run from December 10, 2018 through January 11, 2019, the timeframe has been extended to January 17, 2019. The move to extend was made to give competition authorities and other economic regulators ample time to review the transaction. W. Hill expects settlement of the deal by January 25, 2019, but is open to another extension if necessary..
The Strategic Rationale Behind W. Hill’s Acquisition of Mr. Green & Co AB ( MRG)
Philip Bowcock, CEO of William Hill mentioned at the time of announcement that their digital and international business will improve by taking over the purely online operations of the MRG. As a remote gambling operator, Mr. Green & Co AB holds licences issued by Great Britain, Malta, Italy, and Denmark: plus an upcoming Swedish licence to boot. The latter will be issued ahead of the opening on January 01, 2019, of Sweden’s re-regulated gambling industry. MRG online gambling operations are carried out mainly via the widely accessible (in 12 markets) Mr. Green Casino, and Redbet Sportsbook.
Other subsidiaries include Nordic-facing Bertil and MamaMia Bingo, Danish Bingojov and BingoSlotbet, the Winning Room in European markets, as well as thru Latvia iGaming leader, 11.lv. MRG’s 2018 performance made the company even more desirable as vehicle for the British bookmaker’s strategic preparations for the forthcoming Brexit. Deriving most of its annual gambling revenues of £1.7 Billion from the UK market, the company calculated that if Hill and MRG’s 6-month earnings combined, the total would have boosted Hill’s online revenues by up to 42 to 47 %. The estimation does not even include the British firm’s US-based gambling operations. Based on that estimation, W. Hill is certain it can achieve its goal of easing its reliance on the UK market.
Gambling Acquisition Deal Elicits Favorable Response
One indication that the proposed gambling deal immediately elicited favorable response was the 8% rise of William Hill shares after the offer document was made public. MRG’s showing was more impressive, as the news spurred a hike of 47%. The increase catapulted Green’s share price to SEK 68.40, nearly equalling W. Hill’s SEK 69 per share offer. Actually, MRG’s price index has already reached and surpassed the SEK69 offer.