Will Sportingbet finally get a takeover bid?

For some time there has been talk that Sportingbet would be a takeover target for one of the bigger players in the bookmaking industry.  Ladbrokes pulled out of one potential bid a while back and ever since then the share price of Sportingbet had been somewhat depressed, but it had its supporters who felt that it was cheap and undervalued regardless of any potential takeover. However, the price has been flying recently and yesterday confirmation came that William Hill was in the early stages of launching a potential bid with GVC Holdings.

Any offer would be substantially in cash with an element of GVC paper. William Hill intends that the entity initially acquiring the Regulated Businesses would be a subsidiary of William Hill and not William Hill Online. GVC and William Hill reserve the right to amend the terms and structure of the possible offer in due course.

The Boards of William Hill and GVC believe that by acting in combination they represent a highly credible possible offeror for the entire Sportingbet business, substantially in cash.

No formal approach has been made to the Board of Sportingbet and there can be no certainty that any offer will be forthcoming and nor as to the terms on which any offer might be made.

In accordance with Rule 2.6(a) of the Code, William Hill and GVC must, by not later than 5.00 p.m. on 16 October 2012, either announce a firm intention to make an offer for Sportingbet in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer

http://www.digitallook.com/news/rns/20373524-14283/WMH-Response_to_recent_share_price_movement_html

There is likely to be much speculation and talk about what any bid price might be, but already there are predictions which make it substantially more than the current price of around 54p.

William Hill and GVC would not comment on the possible value of a bid but Ivor Jones, gaming analyst at Numis, suggested any potential buyer would have to pay as much as £1 a share.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9554300/William-Hill-considers-joint-offer-for-Sportingbet.html

To some degree Sportingbet has been here before with the Ladbrokes takeover talk that saw the price rise then fall a long way when the bid collapsed.


At that time the opening pitch from Ladbrokes was talk of 70p a share, although as often happens city talk was looking a lot higher.

James Hollins, an analyst at Evolution, suggested a possible take-out price of 80p-90p a share, adding that a deal could bring annual synergies of more than £30m.

"We think a deal makes sound strategic sense for Ladbrokes as it would instantaneously establish a market-leading position in more than 10 global territories, including the key Australian, Spanish and Greek markets," he said. 

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/8594873/Ladbrokes-makes-takeover-approach-for-Sportingbet.html

In the end, Ladbrokes decided that the deal didn't make sense to them and pulled out.

The takeover of Sportingbet by rival Ladbrokes was scuppered today due to concern over the online betting group's Turkish operation and increasingly turbulent market, Ladbrokes confirmed. 

Ladbrokes chief executive Richard Glynn said the abandoned approach was not a 'failure' and saved the company from entering a deal which would not have delivered value to its shareholders.

Mr Glynn said: 'Having completed our analysis we have been unable to agree a structure which delivers increased shareholder value within an acceptable regulatory environment.'

http://www.thisismoney.co.uk/money/markets/article-2047368/Ladbrokes-takeover-Sportingbet-scuppered.html

Sportingbet sold off its Turkey business soon after for around £125million and look who was involved in that.

Isle of Man-based GVC, which runs betting websites for German, Latin American and Turkish punters, had acquired Sportingbet’s business in Turkey for €142.5 million last year when Richard Glynn, Ladbrokes boss, turned away from the takeover negotiations. 

http://www.thefinancepages.co.uk/companies/william-hill-sportingbet-acquisition/02300/

So, GVC clearly likes what Sportingbet had to offer even when Ladbrokes didn't.  Does this mean that this takeover is more likely to happen?  It probably has a better chance than the Ladbrokes attempt if only because of the GVC history and the fact that William Hill will get Sportingbet's lucrative Australian business, so it could happen.  One would likely expect any eventual bid to be at least in the 80-100p range, although that was clearly too hot for Ladbrokes liking.

An obvious word of warning is needed on what will happen if the bid doesn't happen?  History suggests that the Sportingbet share price would then fall heavily, although as a company in its own right it still looks quite good, dividend yield at the current price is around 3.3p and that is after a big rise in price from around 30p to just over 53p today in the last few weeks.

However, if this bid were to not happen Sportingbet shareholders may then wonder just who would bid for it given the two biggest players in the UK, Ladbrokes and William Hill, will have dropped out.  Only time will tell and William Hill and GVC have until 16th October to make their intentions clear, but maybe the GVC connection will see a bid this time, then we will see how Sportingbet responds. The share price could see a wild ride between now and then, especially if at any stage a bid looks like falling through. If you like a gamble though on the takeover actually happening and are willing to take the risk of it falling through, you could double your money if a top end price is paid.