William Hill is to acquire the Tom Waterhouse online bookmaking business for an initial AU$34m (£20m) in cash, as it develops its “second home” in Australia.
The bookmaker said today that acquisition of the privately owned business eponymously named after its 31-year-old MD would build on its recent £459m acquisition of Sportingbet Australia, adding extra scale and a customer base which complements its existing Sportingbet and Centrebet brands, having limited crossover.
Tom Waterhouse also has the high-profile media deals - including with Channel 9 for NRL and Channel 7 for racing and AFL - that William Hill CEO Ralph Topping admitted last Friday that his company was in urgent need of down under, in order to better target the recreational punter.
Hill’s share price tumbled 7% following its H1 results last Friday at which it issued several key metrics on the Australian business, including that Sportingbet Australia was currently paying an average £724 to acquire just one customer – more than double the prior year and seven times the UK average – for a return of just £312 per active bettor.
Tom Waterhouse also has stronger brand awareness (69%) than Centrebet (57%) and Sportingbet (52%) in Australia, giving William Hill CEO Ralph Topping and his team food for thought when they select their single brand for the Australian market, a strategy unveiled last Friday.
Hill’s could pay an additional earn-out of up to AU$70m in cash, dependent on tomwaterhouse.com generating an operating profit of between AU$10m AU$30m in the year to December 2015. The UK bookie has also assumed up to AU$6m of liabilities as part of the transaction.
The Northern Territory-licensed business, founded in 2010, increased revenues by 250% to AU$28m in the last financial year to the end of June, but is not currently profitable. Hill’s however said it expected it to become marginally profitable in 2014 following the integration of tomwaterhouse.com onto its own platform, and to generate a return on capital invested by 2015.
Waterhouse will stay on as MD of his brand and join Hill’s Australian management team, reporting to Sportingbet Australia CEO Michael Sullivan.
Hill’s boss Topping said he was “impressed” by Tom Waterhouse and his 80-strong team. “They’ve built a good business in a short period of time and have achieved strong growth momentum.”
Tom Waterhouse said he was “excited by tomwaterhouse.com becoming part of the William Hill family”, and that his customers would benefit from a wider product range and innovations as in the UK.
Hill’s was first reported to be in advanced negotiations to buy the Tom Waterhouse business by the Australian Financial Review in early July. Ladbrokes and bwin.party were also reported to have kicked the tyres before ceding to Hill’s. Tom Waterhouse’s regulator the Northern Territory Racing Commission considered an application to transfer the relevant licences to William Hill at a meeting on Wednesday, according to InDaily.com.au.
Article written by Peter Holmes
