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William Hill Plans Float
UK betting chain William Hill plans flotation
May 13, 2002 Posted: 8:34 AM EDT (1234 GMT)
LONDON, May 13 (Reuters) -- Britain's second-largest betting shop chain William Hill on Monday kicked off a one billion pound ($1.45 billion) share float in London to coincide with an expected surge in gambling during next month's soccer World Cup.
The company, which has more than 1,600 high street betting shops in Britain and also offers telephone and online betting, said it planned to raise around 350 million pounds to pay down debt and fund small acquisitions in its betting shops division.
William Hill joins a growing list of companies planning to float over the summer, though last week's lacklustre reception for music retailer HMV Group has raised fears that many will struggle to attract much interest from investors.
Pubs group Punch is scheduled to float on Thursday, followed by quality control company Intertek Testing next week and energy services firm John Wood the week after that.
Greg Johnson, leisure analyst at ING Barings, thought William Hill could be one of the success stories. "There's a lot of interest in the gambling industry at the moment, and there aren't many pure betting plays out there,'' he said.
Analysts are predicting a bright future for British bookmakers thanks to a relaxation of betting laws and a surge in demand for Internet gambling, and the shares of Hilton Group, owner of Britain's biggest bookmakers Ladbrokes, Rank and Stanley Leisure have surged accordingly.
But of these three companies, only Stanley Leisure counts gambling as its largest sphere of business.
"Maybe the problem with HMV was that retailers are two-a-penny. That certainly won't be the case for William Hill,'' ING Barings' Johnson said.
William Hill Finance Director Tom Singer said UK betting firms could make in excess of 250 million pounds from soccer's World Cup, which kicks off in Japan and South Korea on May 31 and runs until June 30.
"We believe it will be a significant event in terms of market interest and we will be capitalising on that,'' he told reporters.
William Hill was the first major gaming group to launch Internet betting at the time of the 1998 World Cup. It is also the biggest telephone betting company in the world.
Chief Executive David Harding said William Hill had achieved compound annual growth of over 20 percent since 1999, and was already benefiting from the recent scrapping of duty on customers in favour of a gross profits tax paid by bookmakers.
He said first quarter results, showing a 50 percent rise in earnings before interest and tax to 38.7 million pounds, provided "strong evidence that customers are recycling money they used to spend on tax.''
"Provided consumer spending doesn't collapse, there should be a good few years of healthy earnings growth,'' said another leisure analyst, who declined to be named.
Harding said the firm's current owners, private equity groups Cinven and CVC Capital Partners, would sell off some of their 90 percent stake, but would retain at least 30 percent of the business, depending on the price of the share offer.
The company's previous owner, Japanese investment house Nomura, scrapped plans to float at the last minute in 1999 in favour of a trade sale for 825 million pounds.
Harding added the firm planned to cut debt from around 800 million pounds to 500 million following the flotation.
Schroder Salomon Smith Barney is acting as global coordinator and sponsor of the share offer, as well as joint bookrunner with Deutsche Bank. ABN Amro and Cazenove will be co-lead managers of the offering.
May 13, 2002 Posted: 8:34 AM EDT (1234 GMT)
LONDON, May 13 (Reuters) -- Britain's second-largest betting shop chain William Hill on Monday kicked off a one billion pound ($1.45 billion) share float in London to coincide with an expected surge in gambling during next month's soccer World Cup.
The company, which has more than 1,600 high street betting shops in Britain and also offers telephone and online betting, said it planned to raise around 350 million pounds to pay down debt and fund small acquisitions in its betting shops division.
William Hill joins a growing list of companies planning to float over the summer, though last week's lacklustre reception for music retailer HMV Group has raised fears that many will struggle to attract much interest from investors.
Pubs group Punch is scheduled to float on Thursday, followed by quality control company Intertek Testing next week and energy services firm John Wood the week after that.
Greg Johnson, leisure analyst at ING Barings, thought William Hill could be one of the success stories. "There's a lot of interest in the gambling industry at the moment, and there aren't many pure betting plays out there,'' he said.
Analysts are predicting a bright future for British bookmakers thanks to a relaxation of betting laws and a surge in demand for Internet gambling, and the shares of Hilton Group, owner of Britain's biggest bookmakers Ladbrokes, Rank and Stanley Leisure have surged accordingly.
But of these three companies, only Stanley Leisure counts gambling as its largest sphere of business.
"Maybe the problem with HMV was that retailers are two-a-penny. That certainly won't be the case for William Hill,'' ING Barings' Johnson said.
William Hill Finance Director Tom Singer said UK betting firms could make in excess of 250 million pounds from soccer's World Cup, which kicks off in Japan and South Korea on May 31 and runs until June 30.
"We believe it will be a significant event in terms of market interest and we will be capitalising on that,'' he told reporters.
William Hill was the first major gaming group to launch Internet betting at the time of the 1998 World Cup. It is also the biggest telephone betting company in the world.
Chief Executive David Harding said William Hill had achieved compound annual growth of over 20 percent since 1999, and was already benefiting from the recent scrapping of duty on customers in favour of a gross profits tax paid by bookmakers.
He said first quarter results, showing a 50 percent rise in earnings before interest and tax to 38.7 million pounds, provided "strong evidence that customers are recycling money they used to spend on tax.''
"Provided consumer spending doesn't collapse, there should be a good few years of healthy earnings growth,'' said another leisure analyst, who declined to be named.
Harding said the firm's current owners, private equity groups Cinven and CVC Capital Partners, would sell off some of their 90 percent stake, but would retain at least 30 percent of the business, depending on the price of the share offer.
The company's previous owner, Japanese investment house Nomura, scrapped plans to float at the last minute in 1999 in favour of a trade sale for 825 million pounds.
Harding added the firm planned to cut debt from around 800 million pounds to 500 million following the flotation.
Schroder Salomon Smith Barney is acting as global coordinator and sponsor of the share offer, as well as joint bookrunner with Deutsche Bank. ABN Amro and Cazenove will be co-lead managers of the offering.
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