William Hill and their software provider, Playtech, have been having some difficulties in their relationship recently, and now open talks are being held between the two companies to attempt to rescue their joint online venture, according to a leading financial source.
William Hill, who as well as providing high street betting facilities also provide online gambling in the form of casino games, bingo and sports betting, have arranged to meet with Playtech, the Tel Aviv based gaming software development company, to discuss their working relationship in depth.
Playtech who actually own 29% of William Hill Online, need to discuss whether it’s time to end the venture they started together or if they can find a final and ‘third way’ to rectify the situation.
Speaking to the Financial Times, Playtech’s chief executive, Mor Weizer, said they were hoping to have discussions ‘as soon as possible’ and that both companies were looking to explore all possible options, including significant structural changes if necessary to keep the partnership alive.
From William Hill’s point of view, they’re looking to take strategic control over their fast growing online business by putting an end to Playtech’s ability to veto acquisitions and they also want Playtech to commit to not working with their closest high street rivals, Ladbrokes.
Back in February 2011, the William Hill bingo parent went as far as taking out an interim injunction so Playtech couldn’t sell its shares in the online arm of William Hill. It was also forced to pull out of a deal to purchase a mobile betting company due to Playtech’s veto.
William Hill has until November to make a decision; until then they can’t activate an option to end the Playtech partnership which would result in them needing to buy out Playtech’s 29% share in the business. The price of the sale would be discussed and decided by three independent banks.
Three such banks, JPMorgan, UBS and Deutsche Bank put together a 2012 valuation report which showed Playtech’s shares to be worth around £354 million which has caused concern as to whether William Hill have instant access to these kind of funds or whether they’d have to raise them through other means.
Playtech and William Hill Online have been in partnership since 2008, when Playtech bought its share in William Hill Online for €250 million. This share was bought in exchange for the design and software for the online casino and poker games offered by William Hill Online and also the personnel provided to drive customers to the company. This deal has led to William Hill Online sitting amongst the largest European gambling operations.
The partnership has worked wonders for William Hill and it would be sad to see it end but it’s clear that there are plenty of reasons for their disagreements. By November, a decision will have to be reached.