William Hill’s latest merger dead already?

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It seems that William Hill are destined never to be able to sell or merge. The latest twist in this saga comes not from William Hill or Amaya (owner of PokerStars) directly. Instead, it is William Hill’s largest shareholder, whom has proceeded to rip the proposed deal to pieces in an unprecedented open letter to William Hill’s board.

Parvus Asset Management, which owns 14.3% of William Hill, has condemned the proposed merger between William Hill and Amaya, stating that it has “limited strategic logic and would destroy shareholder value”. Such strong opposition will likely lead to other key shareholders falling in line behind Parvus. Potentially bringing a swift end to a deal still in its fledgling stage.

Some see this public airing of shareholder grievances to be a little heavy handed. Though what it does show, is the huge gulf in expectations between William Hills board and its shareholders. With the latter clearly wanting to see the sale of William Hill rather than a merger.

“We strongly encourage that the board and management stops wasting valuable time and shareholder resources pursing this value-destroying deal.” So are comments such as these from Parvus’s co-founders justified? Ultimately they are looking to protect the value of their investment, this must always be remembered. Value, which they believe, is destined to be diminished in this merger. Parvus’s fear stems from Amaya’s focus on i-poker as its primary revenue stream. A revenue stream which the majority of the betting community believes to be in decline.

Further, there are concerns that Amaya’s debt, which it incurred through its $4.9bn acquisition of PokerStars in 2014, may harm the overall value of William Hill. A risk which Parvus bluntly pointed to in the closing remarks of their statement: “it shouldn’t take more than five minutes of the board’s time to realise this deal doesn’t pass the smell test”.

Now, Heads&Heads is not an asset management company, so we have no idea what the ‘smell test’ is. However, what we do know is that this deal is likely dead for now; at least until William Hill can get its board back on side. We look forward to the next chapter in this William Hill drama!