William Hill Plc (WMH), a U.K. operator of more than 2,300 betting shops, rose to its highest price since November 2007 after saying it will take full control of its online operation in a deal with Playtech Ltd. (PTEC)
The shares advanced as much as 8 percent to 437.1 pence, the biggest intraday gain since July, and were up 7.6 percent at 11:58 a.m. in London. More than 6 million shares changed hands, about 2 1/2 times the three-month daily average.
“The exercising of the call option is welcome as it gives the group full strategic control over the business,” Gavin Kelleher, an analyst at Goodbody who recommends buying the stock, said in a note. “Mobile continues to be a driver.”
William Hill is exercising an option to acquire Playtech’s 29 percent stake in William Hill Online, the London-based company said today in a statement. It joins retail gambling firms including Ladbrokes Plc (LAD) in expanding online betting as more customers use mobile phones and the Internet to place bets. New Jersey approved online betting this week, raising investor expectations that more U.S. states will allow the practice.
Playtech shares fell as much as 5.7 percent, the biggest intraday decline since June, even as Chief Executive Officer Mor Weizer said he was “delighted” with the offer. Playtech is receiving a “full valuation” for its stake in William Hill Online and has plenty of cash to propel further growth, he said in a phone interview.
Taking control of the digital division is a “compelling opportunity to strengthen the group,” William Hill Chief Executive Officer Ralph Topping said today on a conference call with journalists. “The shape of the group in future is a possible 50/50 split between land-based and online.”
William Hill said it plans to raise 375 million pounds in a fully underwritten rights issue to pay for full control of the online business, which had an “outstanding performance in 2012.” The company also said its acquisition of Sportingbet Plc (SBT) is on track to be completed by March 19.
“We believe that the two deals transform William Hill into a fast growing online operation and there remains scope for further multiple expansion,” Greg Johnson, an analyst at Shore Capital who recommends buying the stock, said in a note.
William Hill’s online revenue gained 27 percent in 2012 from a year earlier, while sales at retail shops rose 6 percent, it said today. The company beat analysts’ estimates for operating profit and full-year sales.
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