Hills outlines expected profit fall as MRG takeover nears

21 January 2019

William Hill CEO Philip Bowcock has pledged to remodel the bookmaker’s retail business after the company announced a likely 15% year-on-year fall in adjusted operating profit for 2018 and confirmed that its takeover of MRG is set to be wrapped up this month.

Bowcock (pictured) reiterated his desire to build a “digitally-led international business” after the company said in a trading update today (January 21) that operating profit of £234m (€265m/$301m) for 2018 was in line with previously-issued guidance of between £225m and £245m for 2018.

Ahead of the publication of its full-year results on March 1, the company cited “wider high-street conditions” for an anticipated fall in retail profits, while adding that online delivered a good underlying performance.

The bookmaker “broadly broke even” on its US business after allowing for significant expansion costs, with the company now active in seven states. The company also added that underlying operating profit increased by about 4% year-on-year, excluding the impact of enhanced customer due diligence measures in online and US expansion costs.

In a separate update to the London Stock Exchange today, William Hill announced that the shares acceptance threshold of 90% had been surpassed in its pursuit of Mr Green operator MRG.

Bowcock, who has previously spoken about using the acquisition of online-only MRG to reduce the company’s exposure to the UK market, said: “We now have greater clarity around the key challenges and opportunities for our business. In 2019 we will remodel our retail offer while building a digitally-led international business, underpinned by a sustainable approach as part of our Nobody Harmed ambition.

“With rapid expansion underway in the US, building on profitable foundations, and the acquisition of Mr Green nearing completion, we look forward to making further progress this year.”

William Hill said that as of January 17 it had secured control of about 92% of the shares and votes in MRG, with the bookmaker having acquired approximately 13% of the shares and votes in the company since its takeover offer was confirmed on October 31. After surpassing the 90% threshold, Hills said today that the offer is now unconditional.

Setting out the timeline for the completion of the acquisition, the operator said that it had extended its current acceptance period for shareholders up to January 31. It had previously been extended to January 17 from January 11 to allow for sufficient time to secure regulatory approval, which was granted earlier this month.

The settlement process for shareholders who have already accepted the offer of SEK69 per share – valuing MRG at SeK2.82bn (£242m/€271m/$307m) – will begin on or around January 25, with the settlement process for remaining shareholders who accept the offer scheduled to start on February 8.

Hills added that it would ask MRG to hold an extraordinary general meeting to appoint a new board of directors to reflect the new ownership structure. After calling for the compulsory acquisition of any remaining shares, William Hill will seek to delist MRG’s shares from the Nasdaq Stockholm exchange.