Evoke, the London-listed gambling company that owns the William Hill and 888 brands, is currently engaged in high-stakes takeover discussions with the US casino operator Bally's Intralot. The heavily indebted firm confirmed in a stock market statement that it is exploring a possible offer from Bally's at 50p per share, which values the group at approximately £225 million. This price represents a significant premium of nearly one-third above Evoke's closing share price from the previous Friday, highlighting the potential for a major shake-up in the gambling sector.
Background of the Deal and Financial Struggles
This development comes just four years after Evoke, previously known as 888 Holdings, made a monumental acquisition by purchasing William Hill's extensive network of 1,400 bookmakers for a staggering £2.2 billion. Since that time, the company's fortunes have dramatically declined, with its shares plummeting by an alarming 90%. Evoke has informed investors that any potential deal with Bally's would likely involve an all-share combination, possibly supplemented by a partial cash alternative. However, the company has cautioned that there is no certainty an offer will materialize or what specific terms might be agreed upon.
Regulatory and Market Pressures
Evoke, headquartered in Gibraltar, is grappling with substantial financial challenges, including net debt of around £1.8 billion and a current market valuation of only £175 million. In response to these pressures, the company appointed Morgan Stanley and Rothschild in December to conduct a strategic review aimed at maximizing shareholder value. The gambling industry has faced increased regulatory burdens, with the UK government raising the duty on online gaming from 21% to 40% and online sports betting duty from 15% to 25% in April, excluding horse racing. Evoke's chief executive, Per Widerström, has estimated that these tax changes could cost the business up to £135 million annually.
Last month, Evoke announced plans to close approximately 200 William Hill betting shops starting in May, citing cost pressures exacerbated by the government's tax hikes. The company has also encountered a series of management issues that have further weighed on its performance. In 2023, Evoke removed its chief executive and suspended VIP customer accounts in the Middle East as part of an internal investigation into failures to comply with anti-money laundering processes.
Historical Fines and Regulatory Scrutiny
These recent troubles follow a pattern of regulatory penalties. In 2022, Evoke agreed to pay a £9.4 million fine, then the third-highest in British gambling history, for failings that allowed customers to accumulate massive losses during the pandemic. Earlier, in 2017, the Gambling Commission issued 888 with a £7.8 million fine, a record at the time, after more than 7,000 individuals who had self-excluded from gambling were still able to access their accounts.
Bally's Profile and Potential Impact
Bally's, which is a front-of-shirt sponsor for Nottingham Forest Football Club, was acquired by the Greek company Intralot in a €2.7 billion deal last year and is listed on the Athens Stock Exchange. The casino group owns a diverse portfolio of brands, including the online casino Jackpotjoy, as well as a string of US casinos and resorts, plus a casino in Newcastle. According to City takeover rules, Bally's must confirm by 5pm on 18 May whether it intends to proceed with an offer or withdraw from the talks. Evoke issued its statement following a report on the potential offer by the Sunday Times, underscoring the urgency and public interest in these negotiations.
The outcome of these talks could significantly reshape the gambling landscape, potentially offering Evoke a lifeline amid its financial woes while expanding Bally's footprint in the UK market. Stakeholders are closely monitoring the situation as the deadline approaches, with implications for shareholders, employees, and the broader industry.
