GWM Asset Management Says William Hill Short on Caesars Takeover Details

Posted on: March 30, 2021, 08:04h. 

Last updated on: March 30, 2021, 11:18h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Another money manager is claiming William Hill (OTC:WIMHY) didn’t reveal enough information regarding Caesars Entertainment’s (NASDAQ:CZR) proposed $3.69 billion acquisition of the sportsbook operator.

William Hill
People walk by the William Hill betting shop in the UK. Another investor is contesting the Caesars acquisition. (Image: NewsGroove UK)

GWM Asset Management will reportedly contest the deal. They argue on the basis that William Hill’s board of directors didn’t adequately inform investors on Caesars’ rights to scrap its US joint venture if another suitor attempted to acquire the operator.

The Financial Times reports it saw a copy of a letter sent by GWM to William Hill in which the hedge fund claims the target didn’t alert shareholders to “potentially material” data. That data centers on Caesars’ ability to end the US partnership if William Hill accepted another buyout offer. A request for comment by Casino.org to GWM was not returned prior to publication of this article.

In the letter, the asset manager says that had the terms of the Caesars/William Hill US agreement been properly disclosed, it may have voted differently on the takeover. It added that by not revealing that information, the target prevented a potential bidding war that could have resulted in a higher acquisition offer.

That assertion is rooted in some fact. Other buyers — namely private equity firm Apollo Global Management (NYSE:APO) — were circling William Hill, and Caesars’ $3.69 billion offer is less than the $3.80 billion the older version of the Las Vegas-based casino giant bid for the sportsbook operator in 2019.

For GWM, Time is of the Essence

The chorus of investors suddenly opposing Caesars’ takeover of William Hill is growing louder. Last week, alternative investment firm HBK Europe Management, LLP said it will contest the deal on the same grounds mentioned by GWM.

The two investors combine to own 11 percent of William Hill’s shares outstanding. That’s a meaningful number, but time isn’t on their side. The boards of both companies approved the transaction and the matter is heading to the UK Scheme Court tomorrow.

Convincing the court and other investors to balk at the deal could prove tricky. That’s because Caesars was overt in saying William Hill’s US arrangement with the casino operator would be terminated if it accepted another buyout offer.

What GWM and HBK are hanging their respective hats on is that Caesars was permitted to have a list of restricted buyers for William Hill. HBK previously noted the Harrah’s operator could place six names in that group and replace one every six months. The investor claims that revelation wasn’t publicized by William Hill until the day of the shareholders’ vote.

In the letter released last week, HBK specifically says Caesars directly moved to include Apollo on the restricted list.

What’s Next for GWM

It’s not clear if other investors will join GWM and HBK in contesting the transaction. But the Financial Times reports other hedge funds expressed concerns to William Hill’s board.

Assuming the takeover ultimately goes through, Caesars creates an iGaming and sports betting juggernaut in the US, significantly increasing the operator’s online footprint.

Additionally, the buyer is widely expected to rapidly auction off William Hill’s European unit — a move that’s likely to draw plenty of suitors, perhaps including Apollo.