Stockholm (HedgeNordic) – Bookmaker William Hill said it has made a SEK2.82 billion cash takeover offer to Swedish online gambling company Mr Green (MRG) in a bid to diversify its geographic operations. The offer, which has been agreed by the Mr Green board, represents a 49% premium to Mr Green’s closing share price on Tuesday.
William Hill said in a statement that presence, together with MRG’s experience of launching in new markets, would help the UK-focused group expand internationally. Its exposure to markets including Denmark, Italy and Latvia, as well as the UK and Ireland, would also help William Hill diversify the company.
In a comment to Hedgenordic, Marcus Plyhr, portfolio manager at Norron, says they are delighted with the bid.
“We are delighted with the bid from William Hill for Mr Green. Considering that Mr Green had been trading at a discount valuation versus its peers, we had already felt there was a distinct possibility of a bid for the company, and feel the William Hill bid offers significant positive synergies.”
He further says that the deal highlights value generation possibilities for peers.
“We also think this outlines the value generation possibility of its peers (such as Kindred and Kambi) for its investors, due to the fact that we can actually see positive top-line growth and high margins in the sector, going forward. Particularly in this market, we think investors will be looking more at growth, and diversification possibilities of uncorrelated assets.”
Plyhr sees possibilities of further consolidation in the sector.
“If we were to see a downturn in the general economy, we think the strength of these assets and sector will really begin to shine. Furthermore, there remain many other opportunities for consolidation within the sector, particularly from foreign companies seeking the strength and penetration of these local players have built.”
According to data from Morningstar Direct, the Norron Select fund holds a 2.1% exposure to Mr Green. Shares of the company traded 47% higher midday Wednesday, just below the deal price.