888 Finance Officer Steps Down
Online gambling operator 888 Holdings has revealed that Chief Financial Officer and Executive Director Yariv Dafna will step down from his position. The announcement follows a fall in revenues for the company which completed its combination with William Hill last year. The company is still hopeful that the acquisition will offer further opportunities for growth.
The purchase of William Hill’s international assets has made 888 Holdings one of the largest combined gambling operators in the world. ©Anna Shvets/Pexels
William Hill Acquisition Complete
888 Holdings has announced the departure of its finance chief Yariv Dafna after two years. Revealing the directorate change, the company stated that the Chief Financial Officer and Executive Director would step down following the publication of the group’s FY22 results. The board has now begun its search for a successor to take over the role from Dafna, who will leave his post on March 31st.
CEO of 888 Holdings, Itai Pazner, took the opportunity to thank Dafna for his contribution to the company. Dafna played a crucial role in the completion of 888’s successful combination with William Hill, as well as orchestrating the financing of the bookmaker’s external debt. On behalf of 888 Holdings, Pazner wished Dafna the very best of luck in his future endeavors.
888 Holdings completed its acquisition of William Hill on July 1st. Thanks to the acquisition of the heritage bookmaker’s non-US assets, 888 Holdings is now considered to be one of the world’s largest combined betting and gaming operators. 888 agreed to purchase William Hill’s assets in September 2021 for £2.2 billion.
However, before the takeover was completed the sportsbook’s enterprise value was revised down to between £1.95 billion and £2.05 billion. William Hill’s international assets were sold to 888 by US casino giant Caesars Entertainment, which purchased William Hill for £2.9 billion in 2020. The American firm was only interested in the company’s US assets as part of its strategy to expand into the sports betting market.
Caesars Entertainment soon sought to sell off all of William Hill’s international assets, and a number of parties expressed their interest. US private equity firm Apollo, which lost out to Caesars on the main acquisition, was rumored to be in the running, as was German operator Tipico and Fred Done of Betfred.
In the end it was 888 Holdings that won out, helping Caesars to recoup a significant portion of its expenditure in the process. 888 Holdings gained William Hill’s portfolio of 1,500 UK betting shops, as well as its European operations. Also included in the deal was online gambling brand Mr Green.
Revenues Decline
While the acquisition offers a great opportunity to 888 Holdings, it has also posed some financial challenges. It was reported that J P Morgan and Morgan Stanley, the two investment banks that underwrote the £1 billion acquired to support the purchase have experienced difficulty in securing investors.
It was also alleged that the banks took on £760 million of 888’s debt, due to the lack of buyers. The debt sale was initially slated to be completed alongside the merger, but was later delayed. Rising inflation has undermined investment in debt transactions across the market.
In July, 888 completed the sale of its B2B and B2C bingo businesses to Saphalata Holdings for $45.25 million. The deal came as part of the operator’s strategy to focus its efforts on the integration of William Hill’s assets. However, 888 is still suffering from a drop in revenues.
Publishing a post-close trading update for the twelve months ending December 31st 2022, 888 Holdings posted revenues of £1.85 billion. Despite benefitting from an uplift due to the Fifa World Cup in the final quarter, the results still marked a 3% dip.
Online revenues brought further disappointment, falling 15% on the previous year to £1.33 billion. The operator attributed this decline to the reinforcement of online player safety measures in the UK. The temporary closure of its Dutch operations following the loss of its local license also had a knock-on effect. Nevertheless, CEO Itai Pazner was optimistic in his statement:
“Revenues during the fourth quarter saw continued strong trading in retail, and a robust performance online. As previously discussed, we continue to see pressure on our UK online revenues from regulatory change including the ongoing impact of the enhanced player safety measures, but I am confident we are building a sustainable leading business for the future.”
New Legislation Incoming
At the end of the year 888’s debt stood at £1.8 billion, with around 70% of interest rates fixed for the next three years. The operator has promised to cut its net debt from more than five times earnings to 3.5 times by the end of 2025. It is also aiming to raise revenues to £2 billion in the same timeframe.
Following the publication of its trading update, shares in 888 Holdings dropped by 4% to a little below 90p. Over the course of the last year, the company’s stock has shed two thirds of its value. Despite challenging times ahead, 888 remains hopeful in its projections. Its outlook for 2023 remains unchanged, as group revenues are expected to dip by single-digit percentages.
Pazner also offered an update on 888’s progress on integrating William Hill’s assets with its own. The CEO stated that work has begun on migrating Mr Green to its proprietary global tech stack. In December, it outlined its updated strategy at its Capital Markets Day.
While 888 blamed stricter regulations around online gambling in the UK for its reduced revenues, it could still benefit in the long term. The government is expected to publish a white paper outlining new legislation in the coming weeks, as it seeks to keep pace with online gambling. This will have an impact on the industry, and could squeeze out smaller operators, leaving larger operators like 888 with an increased market share. Remaining hopeful, Pazner added:
“As we look forward, we remain focused primarily on successful integration, execution and de-leveraging in order to unlock the potential from our enlarged business.”
