Key Takeaways
William Hill’s biggest shareholder, Parvus Asset Management, has made it clear that it will not stomach a proposed merger with Canada’s Amaya Inc, the parent company of PokerStars.
The hedge fund, which owns a 14.3 per cent stake in the UK bookmaking giant wrote an open letter to William Hill’s board, Thursday, and it did not mince its words.
“The board refused to talk to the 888/Rank Consortium just two months ago,” it said, referring to the £3.4 billion takeover bid proposed by 888 and Rank, which was quickly rebuffed by the board.
Ex-William Hill CEO Ralph Topping said he agreed with Parvus’ assessment and that the proposed Amaya deal had left him “scratching his head.” (Image: Bill Murray/SNS Group)“You urgently need to explain why you are applying such blatant double standards,” it continued. “We strongly encourage that the board stops wasting valuable time and shareholder resources pursing this value-destroying deal. Instead, the board and management must focus on maximizing value for owners, rather than Amaya shareholders, by considering all alternative options available, including a sale of William Hill.
Shareholder ConcernsOn Friday, while the William Hill board was in crisis talks, the company’s former CEO, Ralph Topping, added his two cents. He told the Financial Times that he was fully supportive of Parvus and that the initial announcement of the deal had left him “scratching his head.”
“Both [Amaya and William Hill] have a lot to sort out in their own business. I’m very anxious on the future of William Hill,” he said.
Parvus is concerned that the cross-border deal is too complex and lacks industrial logic. There is also concern that Amaya’s former CEO and major shareholder, , is facing five counts of securities fraud in Montreal.
The Canadian firm is also facing a potential $870 million fine from a judge in Kentucky in conjunction to PokerStars’ operations there prior to Black Friday.
Amaya RespondsAmaya responded to the Parvus’ missive on Friday, complaining that it “contains inaccuracies that can be dispelled through reading Amaya’s public filings, which will attest to the high quality, consistent profitability and stable growth prospects of our business.”
Given the strategic fit, diversification and potential synergies we have a responsibility to all our shareholders to fully assess this. However, it is premature for us to draw conclusions whilst this work is ongoing,” said William Hill in an official statement, Friday. The board would not come forward with a transaction unless it was satisfied that it was in the interests of all shareholders.
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