New poll: Will Hills exercise its Playtech JV call option?
With November's deadline drawing closer, could this week's interim management statement see William Hill buy out its partner's 29% share in their joint venture?
With less than two months remaining until William Hill’s deadline to exercise a call option on its 2008 joint venture with Playtech, speculation has been growing that this week’s interim management statement for the 13 weeks ended 25 September 2012 could be the time when a decision is made.
In February this year, Hills’ chief executive Ralph Topping stated that the agreement with Playtech “needs to change”, however as the deadline draws closer there is still no material change to a relationship which Topping argues is “not appropriate going forward” in its current format.
In an exclusive interview for the 100th issue of eGaming Review, Topping said of the discussions: “It’s like waiting to see the sex of your child “ you can either go and ask the doctor or just wait and see what pops out.”,
Last year saw the operator take out an injunction on the software provider amid speculation regarding merger talks between Playtech and Ladbrokes, while a mass walkout from William Hill’s Tel-Aviv office was regarded by some to be emblematic of difficulties emerging in the relationship between the two JV partners.
A number of analysts have been outspoken in their opinions that a resolution of the Hills-Playtech relationship is required sooner rather than later, with Ivor Jones of Numis saying in the aftermath of Hills’ H1s in July: “Until there is clarity [on the Playtech discussions] we are going to find it hard to be positive on the William Hill shares.”
In a statement that same month, William Hill announced “Our chairman and chief Executive continue to meet regularly with their counterparts on the Board of Playtech ahead of this. Discussions have been amicable and continue.”
Similarly, Playtech revealed in its H1 results that it had continued to hold “constructive and amicable meetings” with its JV partner in the light of a strong Hills first-half performance seeing Playtech’s profit-share from the deal reach 22.7m, a 21% year-on-year increase.
Even if no announcement is made this week, William Hill and Playtech may well continue to hold discussions which ultimately lead to the call option being activated later this month or at some point during November.
Hills has been engaged in takeover discussions with GVC and Sportingbet for the past four weeks, with a deadline for a proposed joint bid less than 36 hours away, and progress on this front could potentially have put discussions with Playtech on the back burner, thus delaying any announcement for the time being.
Of course, there remains the option that the London-listed operator opts not to exercise its option, however analyst Nick Batram of Peel Hunt explained in a note last month that the ongoing Sportingbet discussions “could mess the picture with Playtech further”, suggesting: “There is clear logic for William Hill to want to trigger the buy-out now, essentially to give itself the flexibility of undertaking both deals in relatively short order.”
To vote on this week’s poll, see the right-hand side of the page or visit the eGaming Review LinkedIn Group.