Caesars Entertainment is in advanced discussions to acquire British gambling firm William Hill for £2.9 billion ($5.27 billion). The news broke on September 28 as the London Stock Exchange (LSE) opened for business.

William Hill issued a statement to the LSE at 07:00 local time. The statement confirmed talks with Caesars Entertainment are at an advanced stage. Caesars Entertainment is paying cash for all William Hill shares, a cost of £2.9 billion ($5.27 billion).

This sum values William Hill shares at 272 pence per share, a premium of 25% at their current price.

The announcement comes 48-hours after William Hill revealed it had received two separate proposals. Both came from Apollo Management International and Caesars Entertainment.

Shares in William hill soared on September 25 following the takeover rumors. The William Hill board indicated it recommends the deal to shareholders. 109.25 pence is what a William Hill share cost on August 3. The same share was worth 304.10 pence after the Caesars Entertainment rumors.

This latest announcement wasn’t taken well by William Hill investors as they expected more bang for their buck. William Hill’s share price tumbled 11.63% to 275.90 pence per share.

What Does Caesars Entertainment See in William Hill?

COVID-19 has decimated the gambling industry around the world so the acquisition looks ill-timed at best. £2.9 billion ($5.27 billion) is a hell of a lot of money at any time, never mind in the current climate.

William Hill saw more than $770 million wiped off its value in March. The bookmaking giant revealed poor trading figures due to the ongoing COVID-19 pandemic. Share dropped from 192.40 pence to 142.50 pence in the space of a week. They went into freefall and bottomed out at 34.07 pence on March 19. That valued the company at a mere £356.4 million ($647.1 million).

888 Holdings and Rank Group offered 352 pence per share in October 2019. Shareholders will now wish they’d accepted that offer.

Caesars Entertainment isn’t forking out this huge outlay just to be kind but because they see William Hill as a viable business. William Hill no longer has an Australian presence, but business is booming in the United States.

The company has 170 sites across 13 U.S. states and gambling profits continue rising. This is because the Supreme Court ruled the long-standing ban on sports betting in the United States is unlawful. Increasingly more states are allowing their residents to bet on sports. Caesars Entertainment already owns 20% of William Hill’s U.S. operations.

 CEO Speaks Out

Caesars Entertainment’s CEO Tom Reeg has had a busy few months. He oversaw the US17.3 billion (A$24.48 billion) merger of Caesars with Eldorado Resorts in July. Now he’s at the forefront of the William Hill deal and looking forward to it happening.

“The opportunity to combine our land-based casinos, sports betting, and online gaming in the U.S. is a truly exciting prospect. William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to better serve our customers in the fast growing U.S. sports betting and online market.”

“We look forward to working with William hill to support future growth in the U.S. by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment.”

There’s a long way to go before this deal completes due to red tape. Caesars Entertainment has completed due diligence checks to assist the deal progressing smoothly. A date of the second half of 2021 is penciled as a completion date.

Shares in Caesars climbed 4% on the back of the takeover news. Investors are delighted to hear William Hill will add between US$600-$700 of net revenue to the company accounts.