HG Vora Buys $149 Million William Hill Stake, Stokes Sale Chatter

Posted on: September 19, 2020, 05:49h. 

Last updated on: September 19, 2020, 09:30h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

HG Vora Capital Management, an activist hedge fund with long-running experience in gaming equities, has reportedly bought 5.1 percent of William Hill’s shares outstanding (OTC:WIMHY). The deal, valued at nearly $149 million, fuels speculation the firm could push for a sale of the British bookmaker.

William Hill
The William Hill sports lounge at Prudential Center in New Jersey. A hedge fund could push the sportsbook operator to sell itself. (Image: NHL.com)

As of the end of the first quarter, New York-based HG Vora has $7.56 billion in assets under management. Founded in 2009 by Parag Vora, the firm describes itself as focused on “value and event-driven investments.”

Talk of a William Hill sale, namely its rapidly booming US business, isn’t new. As sports wagering continues its torrid escalation pace in the US, analysts are saying investors don’t adequately value William Hill’s US footprint. Via recent deal-making, the company is the largest sportsbook operator in this country, and analysts argue it should be considered as a high-growth stock, treatment it’s not receiving.

Recently, talk regarding the fate of William Hill’s US business is gaining momentum, with some on Wall Street floating the idea of a 50/50 partnership with Caesars Entertainment (NASDAQ:CZR). In that proposed deal, the companies would spin off 20 percent of an iGaming/sports betting business to public investors, with each operator retaining 40 percent.

Speaking of Caesars…

Caesars is relevant to the fate of William Hill’s US unit for multiple reasons. Through the takeover creating the new version of the gaming giant, the UK-based company will run all Caesars sportsbooks across the country. The old Eldorado Resorts, the buyer of Caesars, owns 20 percent of William Hill’s domestic operations and collects 40 percent of the profits from that arrangement.

HG Vora has Caesars ties, too. The hedge fund took a stake in the gaming company in 2018 and pushed the then-financially flimsy company to sell itself. The asset manager still owned 1.5 million Caesars shares as of the end of June, but it’s been trimming that position.

It’s not immediately clear if HG Vora is pushing for a sale of William Hill to Caesars, another buyer, or if it would be satisfied with a spin-off of the US business.

That’s not the only example of the hedge fund having success on the gaming consolidation front. The money manager held positions in Penn National Gaming (NASDAQ:PENN) and Pinnacle Entertainment in advance of the former acquiring the latter for $2.8 billion in 2018.

Other Gaming Bets

HG Vora’s equity portfolio features exposure to online gaming and sports wagering in the US and abroad. In addition to the aforementioned Caesars and William Hill positions, the hedge fund owns 10 percent of Gamesys, the British company behind Jackpotjoy and other internet gaming brands, reports ThisIsMoneyUK.

In the states, the hedge fund is one of several holding equity on Twin River Worldwide Holdings (NYSE:TRWH), itself an acquisitive casino outfit.

The investment vehicle also recently liquidated a stake in Las Vegas-based Boyd Gaming (NYSE:BYD).