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William Hill Plc will acquire Leroy's owner, American Wagering Inc., for about $18 million, the London-based company said Thursday. In addition, William Hill is buying Club Cal Neva Satellite Race and Sportsbook Division in Northern Nevada for $21 million.
William Hill Plc operates 2,359 land-based sports betting and gaming locations across the United Kingdom. It also owns 71 percent of William Hill Online, an online gaming business.
CEO Ralph Topping said his company had been considering expansion in Australia or the United States through acquisition: "We've grown our land-based business over the last six to seven years. We've grown our online business into the top two or three in Europe. As part of our strategic thinking over the last three years we've been looking for (foreign) acquisitions."
Topping also said he expects more future consolidation in the sports betting industry.
John English, American Wagering's senior vice president of business development and public affairs, said the companies had been working on the deal for some time.
"Once all of this is approved, the partnership will give us more marketing power to grow our operations overseas," he said.
English described the deal as more of a partnership than an acquisition with American Wagering and Club Cal Neva's Sportsbook Division operating as independent companies within a new corporate structure. He said William Hill executives had been in Las Vegas studying Leroy's sports book and mobile wagering operations.
The deal gives each American Wagering common-stock shareholder the right to receive 90 cents a share. William Hill is also providing a $4.25 million convertible loan and settling about $4 million of debt and preferred shares of American Wagering.
American Wagering shares, which trade on the Over-the-Counter Bulletin Board, surged on news of the deal, climbing 23 cents, or 46 percent, Thursday to close at 73 cents.
American Wagering, founded in 1978, employs about 200 people at its sports books and kiosks under the Leroy's brand. The Cal Neva Sportsbook Division is part of Sierra Development Co., a privately owned hotel and casino business.
American Wagering's decision to accept the takeover bid comes as the company has expanded rapidly into the mobile sports wagering business.
Both its Leroy's applications for Android and BlackBerry smartphones were approved this year by regulators and were exceeding company expectations in downloads and handle. The company has also submitted a request to the Nevada Gaming Control board for approval of its new tablet applications on Android.
Vic Salerno, American Wagering chief executive officer, said he was hopeful that regulatory approval of the new applications could be completed at the same time as the sale to William Hill closes. William Hill expects its licensing to be completed during 2012.
For the three months ended Oct. 31 , American Wagering reported a loss of $226,000 on revenue of $3.6 million. As of Thursday, the company had not reported fourth-quarter earnings.
In a statement, William Hill said in the 12 months through Jan. 31, American Wagering's revenues were $14.8 million and earnings before interest, taxes, depreciation and amortization, or EBITDA, were $2.1 million.
Topping said his company had not decided whether it will replace the Leroy's and Club Cal Neva brands with William Hill once the deal closes.
"We've got a wonderful brand that has been around for 76 years," Topping said. "But you don't mess with brands that have tremendous value. William Hill is a very valuable addition, but we'll listen to the management and make the right decision."
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