Will Hill buys out Playtech stake

[brean78]

Best news of the day:

http://uk.reuters.com/article/2013/0...92008L20130301

William Hill, Britain's largest bookmaker, is paying 424 million pounds to take full control of its fast growing online business, buying out partner Playtech.

[universal4]

I had thought we talked about Playtech's stake in William Hill previously over the last few months during discussions when WH was bidding on SportingBet but couldn't seem to find it.

I wonder if we have seen the last of their acquisitions for a while or if they will continue to expand.

I think this is a good move for WH especially if they can continue their growth.

Rick
Universal4

[ocreditor]

I thought the thread was asking a question - Will Hill buy Playtech...
Now I realize it's the real thing, Will Hill will buy Playtch!

[universal4]

NO!

William Hill did NOT buy Playtech.

Playtech has a 29% (I think) percentage of William Hill's online operation. WH is buying that out so they will now own 100%.

Rick
Universal4

[lowrisk]

This is good news, maybe now they may have slightly more flexibility on the casino side of things? Who knows!

[ocreditor]

Does this mean Will Hill will drop all Playtech games? Or will they keep them despite this "breakup"?

[universal4]

I personally do not see this as a breakup so much as just buying out their earlier investment that I am sure Playtech made a few coins on.

This helps William Hill become more autonomous and gives them more freedom.

I have not heard or read of any plans for William Hill to stop using Playtech software, and I would think that PT would want them to continue since it is one of their strongest brands currently.

Rick
Universal4

[ocreditor]

i would tend to agree, if not for the reports of some bad blood between the two companies. it's like they didn't want any part of each-other.
oh well, this is merely speculation. let's wait and see what changes will come - if any.

[Caruso]

I thought the thread was asking a question - Will Hill buy Playtech...
Now I realize it's the real thing, Will Hill will buy Playtch!

I assumed from the truncated title that WH was buying Playtech.

[TheBoyMitchell]

What I dont get is that WH dont really get any more automation. if anything it means that they can make decisions without having Playtech influence over them.

However Playtech will (at the moment) still have access to the WH back end via the Aff program, and all the data involved via AffUtd to take the WH database and cross sell it into the other AffUtd properties, all the time WH are using Playtech software.

And getting £424m at the same time.

I'm struggling to see what the benefit is to Hills here, unless they are going to move platforms. Unless they just got so fed up that they are paying up to retain control of where they want to go.

[universal4]

Because now they own 100% instead of 71%.

Rick
Universal4

[vinism]

What I dont get is that WH dont really get any more automation. if anything it means that they can make decisions without having Playtech influence over them.

However Playtech will (at the moment) still have access to the WH back end via the Aff program, and all the data involved via AffUtd to take the WH database and cross sell it into the other AffUtd properties, all the time WH are using Playtech software.

And getting £424m at the same time.

I'm struggling to see what the benefit is to Hills here, unless they are going to move platforms. Unless they just got so fed up that they are paying up to retain control of where they want to go.

This partly a licensing issue. I'm sure William Hill doesn't like having to answer questions about Playtech ownership every time they go up for a license. And this is partly a business decision. I'm sure William Hill would like to pursue its business strategy without worrying about what one of its largest stakeholders thinks.

I think one of the key points to consider in this deal is we're moving into an era where suppliers (e.g. Playtech) and operators (e.g. William Hill) are becoming or have become truly separate entities, rather than symbiotic entities.

[TheBoyMitchell]

I agree with the above, but what I am pushing at is this...

Lets say the deal was with you and me. You provide the software, the back end, the affiliate program etc. I buy you out but I keep those in place? I give you £424m but you still have access to my database of players and you still control the software and backend?

Something seems a little wierd. If I was buying someone out, then I would want to buy you (in the words of Mickey Flanagan) 'out out'. I wouldnt want you to have access to anything now that I own 100% of the business. Especially bearing in mind our somewhat turbulent working history together.

[universal4]

The "supplier" agreement and the 29% stake agreement were two sepearte deals as I understood it.

Playtech is still the software supplier and any licensing deal including percentage of sales etc is still in place.

Playtech will no longer "OWN" an actual piece of the online company after the buyout is completed. (Prior to this, they actually had a 29% ownership of the online company)

Rick
Universal4

[vinism]

I agree with the above, but what I am pushing at is this...

Lets say the deal was with you and me. You provide the software, the back end, the affiliate program etc. I buy you out but I keep those in place? I give you £424m but you still have access to my database of players and you still control the software and backend?

Something seems a little wierd. If I was buying someone out, then I would want to buy you (in the words of Mickey Flanagan) 'out out'. I wouldnt want you to have access to anything now that I own 100% of the business. Especially bearing in mind our somewhat turbulent working history together.

Much of this depends on the nature of the supplier agreement that Rick is talking about. And this supplier agreement can take many forms. Playtech can provide the software and nothing else, leaving all of the operational elements to William Hill. Or they can arrange management services (Playtech says it doesn't offer management services itself) for the operator if they lack expertise in a certain area. Other software operators will run the site for you. That's what Dragonfish/888 will be doing for Treasure Island in Nevada. TI isn't contributing any operational expertise.

In the William Hill case, I would expect William Hill to be providing the operational expertise. And because Playtech is acting as a supplier to William Hill, the customers belong to William Hill now, not Playtech.

Could Playtech try and run off with William Hill's customers? Theoretically. But that would be really bad for business in what has become a much more regulated market. And especially bad in an environment where "best of breed" is becoming the norm. Playtech would risk wrath of regulators and operators everywhere if they did that.

Also, even with the buyout, William Hill needs a software provider. And if they like Playtech's software, why not keep them if the commercial terms work?