UPDATE 2-Expanding William Hill buys out online partner
By Keith Weir
March 1 (Reuters) - William Hill is to pay 424 million pounds ($643 million) for full control of its online business, marking an acceleration of the expansion of Britain's largest bookmaker.
The deal to buy out the 29 percent stake in William Hill Online held by software company Playtech was the company's second major deal in the past three months.
It has already agreed to pay 460 million pounds for the Australian and Spanish operations of online gambling company Sportingbet, a deal set to complete on March 19.
The two transactions were designed to reshape William Hill, set up in 1934 and a familiar name on the British high street where it has more than 2,000 betting shops across the country.
The company, which generates 90 percent of its revenue from Britain, wants to expand overseas and continue its strong growth in online where increasing numbers of customers now bet.
William Hill will raise around 375 million pounds in a rights issue on a two-for-nine basis at 245 pence per share - a 39 percent discount to Thursday's close - to help fund the Playtech deal. Its shares rose 6.5 percent to 431 pence by 0900 GMT, while Playtech fell 4 percent to 549 pence.
The online gambling sector is seeing a wave of consolidation. Ladbrokes, Britain's second-largest bookmaker, completed the 30 million euro ($39 million) buyout of betting exchange Betdaq on Friday after a number of failed takeover talks with larger companies.
Chief executive Ralph Topping, who has worked for the bookmaker for 40 years, said: "This move rounds off a successful 12 months which have seen us take our first steps into the U.S. and, through the pending Sportingbet acquisition, lay the foundations for growth in the attractive Australian market".
William Hill triggered an option to buy the stake held by Playtech since the venture was set up in 2008.
The price was broadly in line with forecasts. Topping said it had been agreed after bankers for both sides submitted valuations, without needing to call in a third party.
William Hill bought three businesses in the U.S. state of Nevada last year and Topping said he was encouraged by news this week that New Jersey had legalised online gambling.
He al said it was wrong to write off traditional land-based betting despite the fast growth of online. "Any company that goes with one view of the world risks missing an opportunity."
Citi and Investec are global coordinators for the rights issue. They are joined by Barclays as joint bookrunners.