* Caesars eyeing 272p/share offer, far below market
expectations
* William Hill shares down 12% after surging on Friday
* Board says minded to recommend offer at this level
* But equity group Apollo also named as interested bidder
(Adds analyst comments)
By Tanishaa Nadkar
Sept 28 (Reuters) - Caesars is in advanced takeover
talks with William Hill that value the British bookmaker
at 2.9 billion pounds ($3.7 billion) and would give the casino
operator full control of a quickly expanding U.S. sports-betting
and online business.
Caesars was considering offering 272 pence per share and
William Hill's board was inclined to recommend such an offer to
shareholders, the companies said on Monday.
William Hill shares on Friday surged to more than 312 pence
each after it said it had received separate offers from Caesars
and buyout group Apollo.
Those gains were handed back on Monday, however, leaving the
stock at 273 pence, suggesting that even if Apollo counters,
investors now expect the price to be far lower.
Caesars only holds 20% of its U.S. joint venture with
William Hill but the business is built on a presence in Caesars
casinos and its brand name, which the casino owner said it would
have the right to terminate in the event of an Apollo buyout.
The bid significantly undervalues the company but there
seems limited scope for bid competition due to the joint venture
terms and also since William Hill's board said it would be
minded to recommend the offer, Jefferies analysts said.
Apollo did not immediately respond to a Reuters' request for
comment outside usual business hours.
Stifel analyst Bridie Barrett said the brokerage's valuation
range for William Hill is 270 pence to around 400 pence.
"While a termination of the relationship with William Hill
under new ownership makes little business sense, it does add
risk for a private equity acquisition...a price at the upper end
of our range is unlikely," Barrett said.
William Hill's shares were already trading close to two-year
highs before news of the proposals, having fallen to their
lowest in 20 years in March.
It has offset regulatory pressure at home by expanding in
the U.S. and partnering with CBS Sports and ESPN to cash in on
the relaxation of sports betting rules there.
To fund the deal, Caesars said it was raising equity and
would take out $2 billion of new debt secured against William
Hill's non-U.S. businesses.
Caesars said the enlarged sports and online gaming business
in the U.S. could generate between $600-$700 million in net
revenue in FY2021.
The offer comes soon after Eldorado Resorts completed buying
bigger rival Caesars for about $8.5 billion, creating a new
competitor for larger sector players like Las Vegas Sands
and Wynn Resorts.
($1 = 0.7832 pounds)
(Reporting by Tanishaa Nadkar in Bengaluru; Editing by
Ramakrishnan M. and Patrick Graham and Kirsten Donovan)
