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Kevin Smith

William Hill to Swallow Stanley's Betting Arm

16 May 2005

The proposed $935 million cash acquisition of Stanley Leisure's British betting shops would make William Hill the largest bookmaker in the United Kingdom. The deal awaits approval from shareholders and competition authorities.

If the purchase goes through as expected, William Hill would pass Ladbrokes as the largest owner of U.K. betting shops. The addition of the 624 Stanley shops would give William Hill 2,237 shops, compared to 2,000 for Ladbrokes. The newly acquired shops are to be re-branded under the William Hill name

William Hill Chief Executive David Harding is confident the offer will hold up.

"It would have to be a hell of a big move for anyone to trump it and a hell of a big move for Stanley to walk away," Harding said. "The proposed acquisition represents a rare opportunity for William Hill to increase the scale of its U.K. retail betting estate, creating the U.K.'s leading network of licensed betting offices."

The purchase would give William Hill a presence in the northwest of England and Ireland, where the brand has little or no representations.

Stanley Leisure Chief Executive Bob Wiper said William Hill is the ideal suitor for the Stanley betting shops.

"We believe that the price, which reflects the significant synergies available to William Hill, is a very attractive one," Wiper said.

The purchase would give William Hill control over nearly 25 percent of the U.K. betting market. (There are nearly 8,500 betting shops throughout the country.) p align="justify">With the prospect of one company controlling that much of the marketplace, the Office of Fair Trading and the Competition Commission could launch a full investigation before granting approval.

Nevertheless, William Hill believes the deal will not disrupt the competitive balance in England.

"The UK betting market is highly competitive and, accordingly, the board believes that any potential competition issues will not be material," the company said in a prepared statement.

William Hill already has plans--pending approval of the sale--to increase the number of fixed-odds betting terminals in the Stanley shops.

"William Hill has significant experience of developing licensed betting offices and is confident it can upgrade and improve the quality and performance of the acquired estate over time," the company stated.

Stanley Leisure, meanwhile, is looking to sell its betting business and focus on its casino division, which owns some of London's leading gaming halls and others in 37 cities across the country. The group is hoping that the recent passing of the U.K. Gambling Act will enable its casino division increase profits.

Conversely, after initial versions of the UK Gambling Bill calling for more than 20 Las Vegas-style casinos were scrapped in favor of allowing only one such casino, William Hill shifted its focus to its betting operations.

William Hill reported that its bookmaking division increased profits in its last financial year (which ended on Dec. 28, 2005) by 9 percent to £165.5 million.

It has also reported that in light of the takeover, it would no longer be going ahead with a planned £453 million return of capital to shareholders announced in March 2005.

William Hill to Swallow Stanley's Betting Arm is republished from
Kevin Smith
Kevin Smith