William Hill delivers the knockout punch?

There couldn't be a bigger contrast in market sentiment in action than comparing today's response to William Hill's results with Ladbrokes downbeat report delivered on Monday.  As of writing the company is up around 5% on the back of its statement, so has William Hill delivered a knockout blow to its rival?

In fact, reports suggest that William Hill are seeing moderating growth, yet the market still seems to like what it sees. However, when it comes to presentation it would appear that William Hill knows better than Ladbrokes how to hide any bad news in its statement as can be seen by what it reported about its Cheltenham results.

Cheltenham results were not as good for us this year but just after the quarter end, Auroras Encore made the Grand National a major success for William Hill, even beating our record win achieved on the race in 2009 when Mon Mome romped home at 100-1. Both of these big meetings proved to be significant attractions for mobile bettors. Our app was downloaded 45,000 times on Grand National day and 51,000 times during the Cheltenham Festival, putting us at the top of the downloads league for both events.

http://www.digitallook.com/news/rns/20838794-14283/WMH-Q1_Interim_Management_Statement_html?ac=,&username=,

Note how the bad Cheltenham results are glossed over by mentioning the Grand National success and the continued growth in digital players. Ladbrokes made no mention of any improvement in trading after Cheltenham, although surely they did well out of the National meeting as well? Ladbrokes statement left enough to doubt that going forward the company is still struggling, whereas William Hill are now seeing the benefits of its investment online, takeover of Sportingbet and relationship with Playtech. Judging by the two statements released this week, Ladbrokes could learn a lesson to be more upbeat about future prospects, unless of course it really is bad.

Going forward William Hill seems to be projected highly on growth company numbers compared to rival Ladbrokes, which increasingly looks like a value play. Of the two its the latter that has more potential upside, assuming of course that management has got it right on the recovery plan that they have.

Here's the numbers before today;

32Red, the next Sportingbet?

Smaller companies in the gaming sector are always likely to be talked of as possible takeover targets of bigger predators looking to expand their empire, Sportingbet being one that was long put in such a category before finally accepting a bid from William Hill . For investors a takeover is never guaranteed and even if it does happen it might not yield the return that some thought possible, but one of the attractions of buying into smaller companies is that at some stage they might attract the interest of someone bigger. 32Red looks to be one of those attractive, solid smaller gaming companies which even if it doesn't attract any interest is worth investigating in its own right.

It reported fairly solid numbers this morning;

Trading in 2013 to date has been strong across the Company's products with Gross Win for the first twenty-one days in January up 15% on an exceptionally strong corresponding period in 2012 that benefitted from significant promotional activity.

Commenting on the performance, Ed Ware, CEO of 32Red, said:

"32Red has enjoyed another strong year of revenue and profit growth, driven by new player recruitment and our focus on the delivery of exceptional levels of service and entertainment to casino players.   

The Group will announce its preliminary results on Thursday, 21 March 2013.

http://www.digitallook.com/news/rns/20640312-134513/TTR-Trading_Update_html

They are expecting to deliver profits in line with market expectations for 2012 and the current P/E is 13.5, forward P/E 11.2, which for a company still experiencing considerable growth isn't too demanding. In general, its fundamentals look fairly solid based on past performance.

One to note for that March result date.

Online shopping - don't get left behind, a lesson some struggle to learn

There has been much written about the growth of online shopping and the effect that this has been having on the High Street. In the UK companies like HMV have seriously suffered from most of its products now being offered either cheaper online or simply in the form of a new technology that makes the old way of doing things, selling a physical product, almost defunct.  HMV is now in a serious battle to survive, which to a large degree is down to its own failure to adapt to change earlier.

In the gaming sector, companies like William Hill have stolen a march on rival Ladbrokes, with its involvement with Playtech and takeover of Sportingbet in order to enhance its online offer. Ladbrokes, turning down the opportunity to buy Sportingbet itself got left behind, it's web presence being seen as inferior, something it has now resolved to put right, the latest being a deal with Betdaq.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/9786343/Ladbrokes-nears-deal-with-Betdaq.html

Yet despite all the evidence of the importance of an online presence, some companies still seem to think that they can get by without it. It's even more amazing when the company happens to be in the FTSE100 and is still largely sitting on the sidelines while its competitors are enjoying massive online growth.

So, let's talk about WM Morrison.

Sportingbet, losing its shine?

What with the potential takeover of Sportingbet by William Hill and GVC Holdings still in limbo you might think that producing a poor set of results could be a negative on proceedings and explains a little why the company share price has fallen to around 45p. Actually, for the purpose of the takeover, parts of today's results are probably welcomed better than others.

The BBC reports;

Online gambling firm Sportingbet has reported a fall in first quarter revenues citing "challenging" conditions."

European online poker revenue collapsed nearly 50% reflecting "continued structural decline" of the game, the company said.

The total amount wagered in the three months to 31 October fell to £594.3m, compared with £693.7m for the same quarter last year.

Group revenue fell £21m to £38.8m.

Group chief executive Andrew McIver said: "It was a challenging first quarter but a very strong November".

Sports margins in Australia had been "particularly strong", the company said, after a 29% increase in active customers and rapid growth in the amount being wagered via smartphones and other hand-held devices.

http://www.bbc.co.uk/news/business-20551977

Looking at that report again we see the word "challenging" being used quite a bit (key words in company reports). Could it also be a signal of challenging conditions for the likes of William Hill and Ladbrokes when they next report? Perhaps not, but 2013 might not be as rosy for them as recent times. (Panorama, undercover in the bookies)

However, it was reported before that William Hill were particularly interested in the Australian growth side of the Sportingbet business and they will look at the "particularly strong" results there with interest. Sportingbet investors hoping for that 60p+ pay off may be hoping that the takeover gets sorted sooner rather than later.

Sportingbet, William Hill, GVC takeover update 2

Looks like this one may go to the wire as William Hill gets an extension on the deadline.

(Reuters) - William Hill (WMH.L), Britain's largest bookmaker, has been given until next month to submit a formal bid for online gaming company Sportingbet (SBT.L) following a 530 million pounds ($841 million) takeover approach.

The Takeover Panel, which oversees mergers and acquisitions, has extended the deadline for an offer until 1700 GMT on December 4 to allow discussions to continue between Sportingbet, William Hill and joint bidder GVC Holdings (GVC.L), Sportingbet said.

http://uk.reuters.com/article/2012/11/13/uk-sportingbet-william-hill-idUKBRE8AC07M20121113

Meanwhile the share price of both William Hill and Sportingbet drift lower, the latter now around the 50p mark, with the potential takeover being 61p.

Is there a chance it won't happen?

The complication for William Hill is to try to separate out the Spanish business from operations in other parts of Europe where the regulations are less clear-cut.

Partner GVC is planning to acquire those operations in "grey markets" where regulatory risks are higher.

http://uk.reuters.com/article/2012/11/13/uk-sportingbet-william-hill-idUKBRE8AC07M20121113

Previous posts;

Will Sportingbet finally get a takeover bid?

Sportingbet, William Hill, GVC takeover update

Panorama, undercover in the bookies, bad news for William Hill and Ladbrokes?

In recent weeks, what with the Jimmy Savile scandal, the BBC flagship current affairs programme Panorama has had bigger fish to fry than last night's expose' of the UK bookmaking industry. Here's how the BBC set the scene.

Even in recession-hit Britain, the gambling industry is still making a profit - £5.6 billion last year. With casino-style gambling now available day or night at the touch of a button in our homes and on our phones, Panorama explores its popularity... and reveals a darker side.

Reporter Sophie Raworth hears from those who have found their lives spiralling out of control, and from industry insiders who say violence and frustration, linked to fast-paced high-stake gambling machines, are increasing in our high street betting shops. Panorama goes undercover in some of Britain's bookies to test those claims.

http://www.bbc.co.uk/iplayer/episode/b01nm27r/Panorama_Gambling_Nation/
(BBC Iplayer link only available for 7 days, not for those outside the UK)

The fast-paced high-stake gambling machines that is referred to above have been one of the major growth areas for High Street bookies like William Hill, Ladbrokes and others. It is also an area where politicians appear keen to focus on when it comes to increasing the taxation take. The Government in this year's budget made plans for raising more in tax from the gambling machines.

Budget 2012: New gaming machines tax 'puts 11,000 jobs at risk'

Bookmakers fear 11,000 jobs are at risk after the Government unveiled a new tax on gaming and fruit machines, which is expected to cost the industry £50m a year.

It goes on;

Sportingbet, William Hill, GVC takeover update

Looks like this one may go to the wire, but the latest offer isn't that much of an improvement on the old one. Unless there is a change of heart it would seem that William Hill and GVC don't believe Sportingbet is worth as much as some analysts have suggested. This one could easily fall through.

WILLIAM HILL’S proposed takeover of online bookie Sportingbet looks set to go down to the wire this week, after the Sportingbet board knocked back a second bid for the company last week.

Sources close to negotiations said yesterday that William Hill, together with GVC Holdings, made an improved informal bid for Sportingbet late last week, after a formal offer of 52.5p per share was rejected last month. The new offer, at over 55p a share, was a significant improvement but still short of the 60p or more that Sportingbet wants. 

http://www.cityam.com/latest-news/second-william-hill-bid-rejected-sportingbet

They have until tomorrow to make a bigger offer or at least show that both sides want to keep on talking. Sportingbet is down around 5% so it looks like the market may well have decided it isn't likely to happen.

Original post can be found here;

Will Sportingbet finally get a takeover bid?

http://www.blogger.com/blogger.g?blogID=4285330955624173039#editor/target=post;postID=2500241780786594703

UPDATE

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.