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According to HBK, William Hill did not disclose until the day of the shareholder vote that Caesars could in fact only add six names to the list and that it could substitute just one of those names every six months.
William Hill declined to comment. However, in a letter from its chair Roger Devlin to GWM, it said that “provisions of these type [sic] are commonplace in joint venture arrangements (and accordingly well understood by the market)” and that the board rejected any suggestion that the list had been used by Caesars as a “poison pill”.
Tyler Tebbs, co-head of event-driven equities at Louis Capital, said while the hedge funds were protecting their position, the wider corporate governance perspective was significant.
“The board should have disclosed that Caesars only has the ability to throw anyone into the blacklist once every six months. It can’t necessarily block everyone — which is what their original statement suggested,” he said, adding that from an ESG perspective, the funds were “doing the right thing”.
Two people with knowledge of the letters said that other hedge funds had also voiced their concerns to the bookmaker’s board. None of these voted at the shareholder meeting in November.
Of William Hill’s largest shareholders, Société Générale said it held the position on behalf of clients and therefore did not take a view. Credit Suisse declined to comment. HG Vora Capital Management did not respond to a request for comment.
One person close to the Done brothers, William Hill’s second-largest shareholder, said that Betfred founder Fred Done was aware of the dispute but was “going to leave them to it”.
Two hedge funds have accused the board of William Hill of failing to disclose information about the bookmaker’s takeover by the casino group Caesars as they push for shareholders to have a second vote on the deal.
GWM Asset Management and HBK Capital Management have written to the bookmaker’s board ahead of a court hearing to approve the deal on Wednesday. They argued that shareholders did not have enough information to approve William Hill’s £2.9bn takeover by Caesars when it was voted on in November.
GWM, which revealed its intention to contest the takeover on Monday, said in a letter seen by the Financial Times that the board had failed to disclose “potentially material” information about Caesars’ ability to terminate its joint venture with William Hill in the US should another acquirer attempt to buy the UK bookmaker.
The hedge fund said that had this been revealed to shareholders, it may have voted differently and that it also prevented a possible auction for the company that could have resulted in it selling for a higher price.
Since the deal, which values William Hill at 272p per share, was agreed, gambling stocks have risen due to the fast growth of the US market and an uptick in online gambling during lockdowns.
The US is seen as one of the fastest-growing and most valuable gambling markets in the world after a Supreme Court ruling allowed states to legalise sports betting in 2018.
Last week HBK, which has a 10 per cent exposure to William Hill, sent a public letter to the board arguing that it had “led the market to believe that no rival bid for William Hill would ever be possible”.
GWM has exposure to just over 1 per cent of William Hill shares through derivative trades, but said it wanted to contest the deal on the grounds that it was “contrary to the spirit of the UK takeover code”.
William Hill revealed in September that it had been subject to a bidding war between Las Vegas-based Caesars and the private equity group Apollo Global Management. Caesars was able to cut its US joint venture with William Hill should the bookmaker be bought by one of a list of “restricted acquirers” that Caesars could decide.
According to HBK, William Hill did not disclose until the day of the shareholder vote that Caesars could in fact only add six names to the list and that it could substitute just one of those names every six months.
William Hill declined to comment. However, in a letter from its chair Roger Devlin to GWM, it said that “provisions of these type [sic] are commonplace in joint venture arrangements (and accordingly well understood by the market)” and that the board rejected any suggestion that the list had been used by Caesars as a “poison pill”.
Tyler Tebbs, co-head of event-driven equities at Louis Capital, said while the hedge funds were protecting their position, the wider corporate governance perspective was significant.
“The board should have disclosed that Caesars only has the ability to throw
2nd fund made a complaint
https://www.ft.com/content/4d8b2e9d-f27c-49a8-8021-ad189c8220de
I read on Nano from you guys awhile back as well jumped in with play money, so not holding out for anything spectacular. Mostly trading US last couple months. Also just mention, this WH chat is one of a kind, not came across another bunch of PIs like this! Best of luck to you guys, cheers for the articles, tips etc.
I did this morning a have a little laugh at the RNS, reminding the market on takeover rules!
“In the know” jab fatigue!
Just got back from my day job, I also keeping a close eye on this situation. As I stated before I’m out but will also be willing to buy at these levels. Nano only a couple of hours before marksman, I would love to be I the know, us PI’s will as always be the last to know!
I mean buying higher than I left czr lol
Yes agree gewilla , I don’t mind buying back in highly than I left so , waiting until next week and see what happens, we all know it was a stitch up gl mate, morbox just bought more nano iam at 20k at just above 15 p fingers crossed mate
Yo Ian, This is all very interesting. Personally, I was disgusted at the initial (and continuing) lack of disclosure by WMH of some now very pertinent facts relating to the Joint Venture agreement, especially with respect to CZR's ability to terminate the JV in the event of a change of control of WMH. Now, thanks to HBK Europe, we know that ability was restricted to six "banned buyers" and severely time restricted too.
It wouldn't surprise me if the court ordered a new vote, but the problem with that is the shareholder register will now look wildly different from last Autumn. There will be far more hedges than PI's. The hedgies will, of course, vote against the takeover. They have nothing to lose and everything to gain, as indeed does does HBK with almost 10% of the equity.
I sold out long ago and bought CZR at $69, which was looking very good at $104 earlier this month and still OK at $87. So I'm in a lose-lose situation, where I won't get any more if CZR has to pay more and CZR is likely to fall if does have to open it's wallet.
However, in the interests of being public spirited, if the High Court does give the WMH board a stiff rap on the knuckles for being way too secretive, this would set a good precedent for far better disclosure in the future, which I'm all in favour of.
The speedy way the current, pretty new management, sold WMH to the very first bid, in return for plummy jobs with long term contracts and CZR share options, was, imho, a gross and stinking conflict-of-interest between their financial interests and the September shareholders on the register. I hope HBK's QC makes a real meal of this next week.
End of rant. I'm looking forward to the April 25th press conference by CZR to update the market and still remain confident that news will see the SP back over $100 during the summer. Fingers crossed!
I was watching Penn for a bit also, seemed to be flying. You’ve done well to follow through on CZRS, the US market is wild! I think the UK is too conservative on stock market. If WH was a US stock then we would’ve hit 10+ no problem. Those of us in UK who got in at 30p done really well, many other UK investors were caught in bear traps with banking, oil stocks etc.
I was thinking of taking a punt on CZRS also, but heard they were doing an equity raise to fund acquisition, so I’m waiting for that & see where they’re SO goes too before deciding. WH&CZRS should be a monster! GL
I sold wmh in November and bought czr , it went up to 106 about 10 days ago , then all of a sudden just started to drop a lot faster and bigger drops than there competitors, I couldn’t work out what was going on , loads of states in America looking to open up for online gamble it was a no brainier for me , but then this came out about an objection to the deal , that’s why it was falling it fell to 79 , it is 85 now but iam out untill this is resolved ,
Query; given we all agreed WH was being sold at below MV. Did anyone think to take proceeds and reinvest in CZRS, as ultimately they’re getting a good deal with chance to reduce their debt, their SP has also performed well since October/November. If you have, have you seen/done any DD on Post merger?
Thanks,
Hep everyone here knew that WMH was being under sold and that Caesars “had WMH over a barrel”. I still think the cash raise was with a nod and a wink for some ii’s to make some money!
So if they do have another vote , I can’t see it making a difference, but I think all that sold after vote and was told it had been sold should b able to vote on the grounds that we were misled , and also what if the bid is not accepted how unfair is that , thoughts plz
I had cashed out before the vote as was disappointed with bid and board recommendation. WH would have skyrocketed like all other gambling stocks in US. I highly doubt I’d ever be redeemed to the true value WH holds, poor play by the board who were supported by SH throughout the pandemic. GLA
Thanks for the articles, interesting stuff.
Do we all not get a payout of 272p due to the takeover?
https://www.businesswire.com/news/home/20210322005160/en/HBK-Europe-Management-LLP-sent-a-letter-regarding-William-Hill’s-upcoming-Scheme-Court-Hearing
Agreed, I think it will still go through but will be keeping a close eye on it.
Have a good weekend both of you.
Cheers
Update from Ulrik makes me think that nothing will come of this but who knows
Still holding a fair whack here so lets see
So if share holders were misled by the sale of wmh and sold where does that leave them legally, iam in czr and it has drop from 106 to 90 in just over a week , so I could lose both ways , unbelievable
No I’m not holding but it does sound like HBK feel that the shareholders were mislead on the Caesars black list of potential JV’s. WMH say the 86% voted for it (not me buy the way), however, if it found that some else could have taken over WMH and still had the right to carry on the JV this could get very interesting.
Interesting, We all know here this was sold on the cheap.