Caesars Rolls Out Share Sale Amid $3.7B William Hill Bid

Caesars Entertainment has commenced a public stock offering of 30 million shares after it confirmed on Monday that it was in advanced talks to buy William Hill for 2.9 billion pounds ($3.7 billion). The casino-entertainment company will provide underwriters a 30-day option to buy up to 4.5 million shares in additional stock.

Caesars (CZR) expects to use the proceeds from the offering for general corporate purposes, including the potential acquisition of UK-based William Hill. Caesars said “Should a firm offer be made it would be subject to approval of William Hill shareholders and customary antitrust and regulatory gaming approvals. Caesars expects that the transaction would close in the second half of 2021.” Its shares closed 2% higher on Monday.

Caesars’ CEO Tom Reeg said “William Hill’s sports betting expertise will complement Caesars’ current of offering, enabling the combined group to better serve our customers in the fast growing US sports betting and online market.” Caesars, its US joint venture with William Hill “needs to be broadened in scope in order to fully maximize the opportunity in the sports betting and gaming sector.” (See CZR stock analysis on TipRanks).

On Sept. 25, J.P. Morgan analyst Daniel Politzer raised the stock’s price target to $63 (8.2% upside potential) from $55 and maintained a Buy rating. Politzer sees improving regional trends and an “attractive setup” for sports betting related stocks over the next few months. The analyst also believes that Caesars will benefit from internet gaming and the legalization of sports betting in several US states.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 7 Buys ratings and 3 Holds. The average price target of $54.70 implies downside potential of 6% from current levels. Shares have declined 2.4% year-to-date.