* 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 details on Caesars' debt, William hill's non-U.S.
business)
By Tanishaa Nadkar and Pamela Barbaglia
Sept 28 (Reuters) - Caesars is in advanced talks to
buy William Hill in a deal that would value the British
bookmaker at 2.9 billion pounds ($3.7 billion) and give the
casino operator 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 a two-year high
above 312 pence after it said it had received separate offers
from Caesars and buyout group Apollo.
They were last at 275 pence, suggesting that even if Apollo
counters, investors now expect the price to be far lower.
Caesars, which first approached William Hill on Sept. 1,
said its offer price included an almost 60% premium over the
company's share price that day and highlighted the risk of
taking on a U.S. business still in its infancy.
The company said it intends to find suitable partners or
owners for William Hill's non-U.S. businesses, including more
than 1,500 UK betting shops.
Caesars could strike a separate deal to flip the UK assets
to Apollo, two sources familiar with the matter said, or if that
failed, launch an auction process targeting both financial and
corporate bidders.
Apollo declined to comment.
UNDERVALUED
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 the backing of William Hill's board, Jefferies
analysts said.
The deal will need to be cleared by antitrust regulators in
the United States and is conditional on Caesars raising cash to
finance the transaction.
Shares in Caesars were down 1.4% at $56.25, having opened
higher. Stifel analyst Bridie Barrett said that a combined
business has the reach, platform and product to carve out a
strong position in the United States.
William Hill, shares of which hit their lowest in 20 years
in March, 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.
Caesars said it would offer 30 million shares to fund the
deal but gave no indication of pricing. Based on its closing
share price of $57.07 on Friday, the share offer would be worth
$1.7 billion.
It would also 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 and Pamela Barbaglia
in London; Editing by Ramakrishnan M. and Patrick Graham and
Kirsten Donovan)
