William Hill’s talks over a potential multi-billion pound merger with Canadian gambling giant Amaya were dealt a blow last night as a leading shareholder slammed the deal.
Parvus Asset Management, the bookie’s largest single shareholder with a 14.3 per cent stake, said the potential merger – which would create a combined company worth around £4.5bn – had “limited strategic logic and would destroy shareholder value”.
Instead, the activist fund manager said it wanted the firm to consider “all alternative options for maximising shareholder value, including a sale of the firm”.
Amaya shares closed down more than six per cent in Toronto last night. “The Parvus letter 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,” the company said.
A spokesperson for William Hill told City A.M.: “Given the strategic fit, diversification and potential synergies we have a responsibility to fully assess this, however it is premature for us to draw conclusions while this work is ongoing. The board would not come forward with a transaction unless it was satisfied that it was in the interests of all shareholders.”
At the start of this week, William Hill confirmed reports that it was in discussions with Amaya over a possible “merger of equals”.
Over the summer, the board of William Hill rejected a takeover offer from UK-listed online gambling groups 888 Holdings and Rank Group. Although 888 and Rank increased their original £3.6bn offer, the bookmaker said that the deal significantly undervalued the group.
William Hill has struggled with its online operations in the last couple of years, warning of a £25m fall in online profits in March and its former chief executive James Henderson announcing he would resign in July after failing to turn around its e-operations.
In 2011, Parvus was instrumental in bringing down a £5.2bn merger between G4S and Danish cleaning company ISS. "Some deals should never leave the boardroom," Parvus said of the deal that incurred G4S £50m of non-refundable transaction fees.