Caesars Gets Partial Clearance For $3.7B William Hill Deal

Caesars Entertainment announced that it has received clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) to acquire UK-based gambling group William Hill.

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Caesars (CZR) said that the deal has also “received approvals from the Mississippi Gaming Commission on November 19, 2020, and the West Virginia Lottery on December 16, 2020.” However, the largest casino-entertainment company in the US still requires regulatory approvals from other local agencies.

Caesars had announced the acquisition of William Hill (WMH) in a transaction worth £2.9 billion ($3.7 billion) in October. The deal is part of the company’s plan to expand its presence in the fast-growing US sports-betting market. Caesars continues to expect to close the deal in March 2021.

Last week, Caesars announced the divestment of its Southern Indiana operation to Eastern Band of Cherokee Indians (EBCI) for $250 million. (See CZR stock analysis on TipRanks)

On Dec. 28, Wolfe Research analyst Jared Shojaian maintained his Buy rating and a price target of $90 (22.2% upside potential) on the stock, following the Southern Indiana deal. Shojaian said, Caesars is receiving 6.4x the $39M of EBITDA, which is “ok” to him. He added, “CZR also entered into an agreement with EBCI to license the Caesars brand and loyalty program, which we roughly estimate could give CZR an extra $5M-$10M of annual EBITDA.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 8 Buys and 3 Holds. The average price target stands at $80.91 and implies upside potential of about 9.9% to current levels. Shares have gained 23.5% year-to-date.