Hill’s prepares to buy out Playtech JV stake

William Hill will announce its Q3 results this Friday, when it is also expected to formally confirm its intention to buy out Playtech’s 29% share in William Hill Online (WHO).

The bookmaker has until November to exercise its first-call option to buy out the software provider’s stake and regain full ownership of its internet business, and is prepared to offer £300m according to the Times, with Playtech holding out in negotiations for nearer the £500m mark.

Playtech transferred c£144.5m of affiliate and marketing assets it bought from founder Teddy Sagi to William Hill in 2008 to establish the JV, with Playtech also becoming its primary gaming supplier, providing its poker, bingo and the vast majority of its online casino.

Since the integration was completed, the business has outperformed all of its listed peers, particularly during the last two years. Revenue was up by year-on-year to 30% to £198.4m up in the first six months of 2012.

But despite the strong financial performance of the JV, the relationship between the two companies has grown increasingly strained. In February 2011, Hill’s took out a legal injunction against Playtech to block it from doing similar deals with other operators, amid rumours its JV partner was talking to arch rival Ladbrokes about a possible £2.2bn merger. The two companies eventually brokered a compromise enabling Playtech to enter software agreements with other companies, paving the way for its July 2011 deal with Gala Coral.

Last October also saw close to 600 WHO staff stage a mass walkout, allegedly orchestrated by several disgruntled senior marketers and ex Playtech employees with ties to Sagi, who holds 49.66% % of Playtech shares through his Brickington Trading vehicle.

Hill boss Ralph Topping (pictured) is also understood to be uncomfortable with Playtech’s power of veto written into the JV agreement, which it is understood to have exercised last November over Hill’s approach for mobile operator and B2B supplier Probability, owner of the Ladyluck’s brand.

Nevada regulators also spent a portion of William Hill’s licence application hearing in June quizzing Topping over the involvement with WHO of of Sagi, who was convicted of fraud and bribery in 1996. Topping told the NGC, who eventually approved Hill’s licence application, that Sagi had no role in day-to-day operations, and described the tie with Playtech as an “investment relationship,” according to the Las Vegas Review-Journal.

Article written by Stephen Carter

Casino Choice journalist

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