William Hill and Amaya confirm merger talks

William Hill and Amaya confirm talks over merger that would create £5bn igaming giant. 

The two companies could join forces to create a combined operation worth approximately £5.7bn. 

In a statement, William Hill and Amaya said that talks were ongoing between the two parties, while according to the Daily Telegraph newspaper, the two groups began talking about a potential merger in July this year, just before news of the Rank-888 bid for William Hill came out.

“Over recent months, the board of William Hill has been evaluating options to accelerate William Hill's strategy of increasing diversification by growing its digital and international businesses,” the companies said in a joint statement.

“Amaya has been undertaking a review of its strategic alternatives since February 2016.

“The potential merger would be consistent with the strategic objectives of both William Hill and Amaya and would create a clear international leader across online sports betting, poker and casino.

“These discussions are ongoing and there can be no certainty that an agreement will be reached.”

The talks come after William Hill in July also held discussions with Rank Group and 888 over a potential deal that would see the latter two companies take full ownership of the bookmaker.

However, Rank and 888 pulled out of the proposed deal in August after William Hill said the offer put forward “substantially” undervalued its business.

According to analysts at Morgan Stanley, a William Hill-Amaya merger would lead to the largest online global online operator in terms of earnings before interest, tax, depreciation and amortisation (EBITDA), and second by revenue. 

Morgan Stanley said a nil premium merger would create a UK-listed business with a market cap of £5.7 billion.

The report also said the deal could lead to significant revenue synergy potential, from using William Hill’s sports and casino expertise to leveraging Amaya’s poker customer base, which could be worth up to £180 million in EBITDA, if Amaya's gaming mix should reach 50% of revenues, like William Hill Online, without cannibalising poker.

However, Morgan Stanley did warn that the merger could increase leverage and exposure to unregulated markets, as well as various “high technical risks” and higher exposure to the poker vertical, which is already mature.

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888, Rank confirm William Hill takeover talks