WMH.L Share News (WMH)

(Sharecast News) - Bookmaker William Hill warned that local UK coronavirus lockdowns would hit core earnings as third quarter revenue fell 9% due lower gaming income.
The company said core earnings would fall by £2m if 100 shops were shut for four weeks. Tougher regional measures have been introduced to combat a resurgence of the coronavirus.

William Hill estimated 10% of its betting shops were located in 'high level' Covid-19 alert areas.

The group, currently subject to a £2.9bn takeover offer from by Las Vegas casino operator Caesars Entertainment, reported total third quarter group revenue down 9%, offset by a stronger performance in the US and international online business which includes brands in Sweden, Germany and Spain.

It also reiterated that a new licensing regime in Germany, with deposit limits of €1,000 and a ban on live casinos, would hit earnings by around £10m per year.

William Hill said that although live sports had resumed "fixture lists remain out of step with prior years and with many events continuing to be held behind closed doors, results have been more unpredictable than normal".

"As a result, we continue to see volatile gross win margins, and we would expect this situation to continue."

Hargreaves Lansdown analyst Nicholas Hyett said that the offer from Caesar's made the numbers "a bit of a formality for William Hill", but noted that the shares were trading at a premium to the bid price.

"Nonetheless the would be acquirer will be pleased to see results improving across the business as sports betting returns and high street betting shops reopen. Growth in the US remains impressive despite the MLB, NBA and NHL only resuming their seasons in late July, and the group is increasingly nailing down marketing deals and smaller acquisitions that will help drive growth nationwide," he said.

"We would note that the shares are trading at a premium to the offer price itself, and that suggests a degree of optimism in the market that a rival bid may be forthcoming. These numbers will do nothing to hurt that hope, but we still struggle to see how bidders other than Caesar's could clinch the deal given the US casino giant is already deeply embedded in William Hill's US business."