William Hill Gets The Stanley Leisure Deal
Published: Friday, May 20, 2005 Online-Casinos.com
WILLIAM HILL GETS THE STANLEY LEISURE DEAL
GBP 504 million for 624
betting shops...amd e-business to be reviewed by Stanley
After weeks of
speculation William Hill Plc, the U.K.'s second-
largest bookmaker, has agreed to buy Stanley Leisure Plc's betting shops for 504
million pounds ($930 million) in a deal that enables it to overtake Ladbrokes
as the industry lader in Britain.
Bloomberg's reported this week that
the purchase of Stanley's 624 betting offices will create a chain of 2,237 bookmakers,
quoting William Hill Chief Executive David Harding (49) on a conference call.
Ladbrokes, owned by Hilton Group Plc, runs about 1,900 bookmaking shops
in the U.K.
William Hill said it won't proceed with plans to return 453
million pounds to shareholders as a result of the acquisition. The betting-shop
operator had planned to give money to investors after being deterred from expanding
into the U.K. casino industry when the government scaled back proposed changes
to gambling laws.
The planned purchase, which is subject to review by
U.K. competition authorities, will create about GBP 13 million of cost savings
in fiscal 2006 and add to William Hill's per-share earnings in that year, according
to the company.
About GBP 7.5 million of the savings will come from eliminating
duplication in areas such as headquarters, sais Will Hill'sFinance Director Tom
Singer. The other 5.5 million pounds will come from improving the performance
of Stanley shops under William Hill's ownership, according to Singer, who was
today promoted to the new position of chief operating officer.
William
Hill plans to sell 30 to 50 of the Stanley shops in towns where regulators may
deem that the company is gaining a local monopoly, Harding said. The risk of the
transaction being stopped by competition authorities is "minimal,'' he said.
Several analysts opined that Will Hill had paid too much for the shops, but
acknowledged that the potential for future financial reward was significant.
The Stanley business made earnings before interest, tax, depreciation and
amortization of GBP 37.2 million in the year ended May 2, 2004, and profit in
the year ended this month was probably "marginally lower'' because of unfavorable
horse-racing and sports results, the company said today.
Stanley, the
U.K.'s largest casino operator, said the sale will leave it with surplus cash
of about GBP 300 million. The company may return a "substantial'' amount
to shareholders, Chief Executive Bob Wiper said in an interview.
The
betting business is being sold for 13.5 times historic earnings before interest,
tax, depreciation and amortization, which is "...a very attractive price,''
Wiper said.
Stanley's online and international betting businesses aren't
part of the William Hill transaction, and the Internet unit may now be sold separately,
according to Wiper.
"We will now conduct a fairly quick review of
our e- businesses, but we don't see them staying in the group in the long term,''
Wiper said. "They may be sold separately, but we expect to hold onto our
international business for some time.''
Ladbrokes will remain Europe's
No. 1 bookmaker, with 2,400 outlets in the U.K., Ireland and Belgium, according
to Hilton Group spokesman James Mason.
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