US casino giant Caesars Entertainment recently agreed to a £2.9 billion takeover of William Hill, a British bookmaker that is making strides in the US sports betting market.

Caesars paying a premium

The two companies announced on Wednesday that Caesars would be paying £2.72 for each share of William Hill in cash. This will bring over a 25% premium on the existing price of the company’s share. The US company’s interest in William Hill was reported last week. The UK company’s directors unanimously proposed the takeover of the company. However, the deal is yet to be approved by 75% of William Hill shareholders. The UK company turned down two bids from the US private equity group Apollo.

With the takeover, Caesars will be able to capture a huge chunk of the US sports betting market. The Caesars Palace owner also runs some properties in the UK.

A new opportunity

In 2018, the US Supreme Court struck down PASPA, an act that prohibited states other than Nevada to have legalized sports betting markets. With this development, newly legalized markets appeared in New Jersey, Pennsylvania, and other states. UK bookmaker William Hill capitalized on this opportunity to enter the US market and firmly plant its feet here.

The US opportunity has also helped the drowning shares of American casino companies a new lifeline, that aim to capture a bigger chunk of the market with their sports betting offerings. In March, the shares of Caesars went down to $6 but were trading at $54 on Tuesday evening. Caesars predicts that the takeover would add an additional $600 million to $700 million to its revenues next year.

William Hill chairman Roger Devlin said that the Caesars takeovers opportunity gives an attractive price to the shareholders. He highlighted the potential for regulatory disruption in the UK and Europe as well as an opportunity in the US which comes with stiff competition. Caesars plans on selling the UK and European branch networks of William hill after the takeover.