Amaya, William Hill Merger Talks Get Serious

William Hill and Amaya Gaming are currently engaged in talks about merging. If the companies were to do so, it would create a £4.6 billion giant.

Such a deal would also bring together one of the world’s largest bookmakers and the biggest online poker site (PokerStars).

Neither company is a stranger to major takeovers and mergers.

Amaya purchased PokerStars for $4.9 billion in 2014.

William Hill received an unsolicited takeover offer from 888 and the Rank Group for £3.16 billion. They weren’t impressed and quickly turned down the bid.

They seem much more interested in what Amaya has to offer – online poker dominance and an international customer base.

William Hill has built a giant through betting shops around the UK and online sports betting. But after struggles that saw CEO James Henderson replaced in July, the company would like to expand outside of their traditional business model.

The possible merger between Amaya and William Hill has been called a “merger of equals.”

Of course, this deal is no sure fix for either side. The sports betting world has been on a steady decline, which has really cut into William Hill’s revenue lately.

The Guardian points out that Amaya is dealing with an $870 million penalty in Kentucky. Odds are that they won’t really end up paying this much, but it’s still a huge risk for William Hill to take.

Another big problem is that Amaya is still immersed in a lot of unregulated markets. William Hill, on the other hand, has less than 5% of their business in unregulated countries/territories. With Amaya, that would rise to around 25%.

On the plus side, both companies would benefit greatly from the opportunity to cross-sell to each other’s strengths. Online poker and sports betting are two skill-based gambling activities that play well off each other.

Given that Amaya has a lower debt ratio than 888 and Rank, they’re the safer route if William Hill wants to merge. They also generate cash at a fast rate due to their large poker customer base.

But the downside is that online poker isn’t growing like it was, due to over-regulation and fewer interested players.

That said, the cross-selling will have to be really good for this to work.