UK bookmaker William Hill and Canadian based Amaya Inc released a joint statement last week confirming that both companies were in discussions for a possible merger that would be based on a merger of equals. While both companies were clear that the discussions were not a guarantee that a merger would take place, one of William Hill’s investors is leaving nothing to chance.
Parvus Asset Management, a hedge fund company and a 14.3 percent shareholder in William Hill has opposed the possible merger and sent the board of directors an open letter without mincing any words. The letter to the board said “We have been supportive owners since March 25, 2014, despite the many operational missteps and weak share price performance. We strongly believe the proposed takeover has limited strategic logic and would destroy shareholder value. Therefore, if a formal proposal is presented, we will actively oppose such a combination.”
Parvus Asset Management is the biggest shareholder in William Hill and is backed by one of the richest fund managers in the United Kingdom, Sir Chris Hohn of the Children’s Investment Fund. The company has called on William Hill to not waste time discussing deals that were a waste of time and could possibly end up damaging the brand even further.
William Hill wants to strengthen its online gambling offerings and increase its presence in international markets. The possible merger with Amaya Inc, the parent company of PokerStars, the biggest online poker website in the world would allow William Hill to pursue its goal and also result in the creation of the biggest gambling enterprise in the world. A representative of William Hill responded to the open letter by saying that the board would not consider entering into a transaction without making sure that all shareholders were satisfied with the deal.
Parvus also highlighted the fact that Amaya Inc could be hit with an $870 million lawsuit after PokerStars and Full Tilt Poker (FTP) were found by a Kentucky court to have violated state gambling laws in the mid-2000’s. The two online poker websites are alleged to have provided real money poker services to US based poker players which was against the Unlawful Internet Gambling Enforcement Act (UIGEA) which prevented online poker websites from accepting money from US based poker players.
William Hill has faced stiff competition in the UK as a number of its competitors have merged in recent times to create stronger entities. GVC Holdings acquired bwin in 2015 and Betfair and Paddy Power merged earlier this year. Ladbrokes, one of William Hill’s biggest competitors is in the process of merging with UK based company Coral. Earlier this year, William Hill rejected two bids from 888 Holdings and the Rank Group as they were not attractive enough and might have to give up its Amaya Inc merger plans if shareholders continue to oppose the move.