Bookmaker takes a punt on $1.3b deal

LONDON - William Hill has agreed to buy Stanley Leisure's betting shops for £504 million ($1.3 billion) to become Britain's biggest bookmaker.

William Hill also said yesterday that, as a result of the deal, it was scrapping plans to return 453 million to shareholders, and issued a downbeat trading update, knocking its shares.

In mid-morning trading the shares were down 2.5 per cent at 512p, the biggest fall on the FTSE-100 index of blue-chip British companies.

Shares in Stanley Leisure, Britain's biggest casino operator, rose nearly 1 per cent to 527p.

"Stanley shareholders are getting the better deal," said analyst Greg Feehely at Altium Securities.

"The price is mind-boggling - 13.5 times historic ebitda [earnings before interest, tax, depreciation and amortisation]."

The deal covers 624 betting offices in Britain, Ireland, the Isle of Man and Jersey and takes William Hill ahead of previous market leader, the Hilton Group's Ladbrokes.

"This acquisition represents a rare opportunity for William Hill to substantially increase its distribution reach," said William Hill chief executive David Harding.

Stanley chief executive Bob Wiper said: "We believe that the price ... is a very attractive one."

Stanley would now focus on its casinos, he said.

Analysts have speculated that the deal could prompt a merger of Stanley's remaining casino assets with London Clubs International, as Malaysian casino firm Genting has a significant stake in both.

William Hill said that in the 19 weeks to May 10, its gross win had been level.

"We've had quite a protracted run of bad horse-racing results and bad football results," Harding told a conference call.

"And we're looking at tough comparatives up until July."

Harding said that about £13 million of cost savings would be extracted from the Stanley Leisure deal next year, including job losses at Stanley's headquarters and
£5.5 million from improved performance at its shops.

He said between 30 and 50 shops might have to be sold to address competition concerns.

- REUTERS