FT: Hedge Funds Peeved with William Hill and Caesars Deal

GWM Asset Management and HBK Capital Management have both sent letters to William Hill’s board of directors protesting what they described as a failure to disclose what they consider as potentially material information. 

Hedge Funds Raise Issues with William Hill/Caesars Acquisition 

Hedge funds may be revolting against William Hill’s board of directors, whom they now say failed to disclose information concerning the company’s takeover bid by Caesars the Financial Times reports.

This comes at a time when shareholders are expected to take a second vote on the outcome of the deal. According to GWM Asset Management and HBK Capital Management, the board has not been entirely forthcoming.

With a court hearing set to give the deal the green light this Wednesday, the hedge funds have little time to make their voices heard. 

According to FT, which has seen a letter by GWM, the hedge fund may be preparing to contest the acquisition as William Hill reportedly “failed to disclose potentially material information” regarding Caesars’ ability to end its joint venture with William Hill in the United States if another candidate for the deal had been present. 

With Caesars placing a solid £2.9 billion offer, hedge funds should not be too distraught, but as the letter outlines based on FT’s reporting, GWM was convinced that should shareholders knew about the possibility of this happening, they may have voted differently, taking the company to a possible auction that could have resulted in a higher selling price.

HBK is not the only one to remonstrate current events. HBK sent an open letter to the company’s board last week criticizing the way the process had been handled as the fund was led to believe that no other bidder for William Hill would be possible.

It’s All About Principles, Argue the Hedge Funds 

While GWM’s exposure to William Hill shares is very small, just 1%, the hedge fund wants to contest the deal on principle. Previously, William Hill revealed that both Caesars and Apollo Global Management had approached it, but Apollo eventually dropped out. 

CVC Capital and Apax Partners also showed interest back in November but for the company’s non-US assets, which are not subject to the newly-revealed termination condition. William Hill chair Roger Devlin has responded to GWM explaining that the provisions outlined in the agreement with Caesars were commonplace in joint venture arrangements, the FT added.

The publication has not been able to reach many of the bigger stakeholders in the company. While HBK and GWM may have a point, this is unlikely to stop the deal from completing with the non-US assets now, proving a worthwhile investment.

Meanwhile, gambling shares continue to climb up, boosted by strong demand in the United States. More states continue to legalize sports betting and enable online gambling to achieve better market synergies and boost results.

William Hill and Caesars have strong operations in all verticals, and a successful outcome of the merger deal is important.