William Hill to benefit from Eldorado's merger with Caesars, says Morgan Stanley
By Michele Maatouk
Date: Tuesday 25 Jun 2019
(Sharecast News) - William Hill got a boost on Tuesday as Morgan Stanley said it was set to benefit from US casino owner Eldorado Resorts' merger with Caesars Entertainment.
The merger, which was announced on Monday, makes William Hill's "position for US sports betting "more powerful, with wider market access, boosted revenues and potential optionality on brand, database and media assets," MS said.
"With US sports worth 35-55% of the current market cap, we would buy the shares here."
MS pointed out that Caesars currently has an agreement with Scientific Games to provide its technology and pricing.
"Given William Hill is migrating its US operations onto its new technology stack in the next two months, we could theoretically see the logic for ERI to realise synergies by moving the supply of Caesars' online sports betting operation from Scientific Games to William Hill.
"Should such a scenario play out, it would create a third major brand in the US market from which William Hill would generate revenue."
The bank rates William Hill shares at 'overweight' with a 235p price target.
William Hill announced back in September 2018 that Eldorado had taken a 20% stake in its US business as part of a 25-year US-focused sports betting partnership. As part of the agreement, William Hill serves as the exclusive sports betting technology operator for all of Eldorado's landbased properties.
Eldorado also owns 13.4 million ordinary shares in William Hill.
At 1415 BST, the shares were up 2.6% at 149p.
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