The heavily indebted UK-listed gambling company Evoke, which owns the iconic William Hill brand and the 888 online casino, has confirmed it is in advanced takeover discussions with the US casino operator Bally's Intralot. The potential deal, valued at approximately £225 million, would see Bally's acquire Evoke at 50 pence per share, representing a significant premium of almost one-third above the company's closing share price last Friday.
Strategic Review and Financial Pressures
Evoke, headquartered in Gibraltar, revealed the talks in a formal statement to the stock market, following a report by the Sunday Times. The company emphasised that discussions are ongoing regarding a possible all-share combination, with a partial cash alternative also under consideration. However, Evoke cautioned investors that there is no certainty an offer will ultimately be made, or on what specific terms.
This development comes as Evoke grapples with substantial financial challenges. The company carries net debt of around £1.8 billion, starkly contrasting with its current market valuation of just £175 million. In December, Evoke appointed financial advisors Morgan Stanley and Rothschild to conduct a strategic review aimed at maximising shareholder value, a move that has now culminated in these takeover negotiations.
Regulatory and Operational Headwinds
The gambling sector in the UK has faced increasing regulatory and fiscal pressures, which have significantly impacted Evoke's operations. The company has been adversely affected by recent tax increases, including a rise in duty on online gaming from 21% to 40%, and an increase in online sports betting duty from 15% to 25%, implemented in April, with horse racing being the sole exception.
Evoke's chief executive, Per Widerström, has stated that these tax changes could cost the business up to £135 million annually. In response to these mounting cost pressures, Evoke announced last month that it would close approximately 200 William Hill betting shops starting in May.
Historical Context and Past Challenges
The potential takeover marks a dramatic turn of events for Evoke, which was previously known as 888 Holdings. Just four years ago, in 2022, the company completed a £2.2 billion acquisition of William Hill's extensive network of 1,400 bookmakers. Since that ambitious purchase, Evoke's share price has plummeted by a staggering 90%, reflecting the severe challenges the company has faced.
Evoke has also been plagued by a series of management and regulatory issues. In 2023, the company removed its chief executive and suspended VIP customer accounts in the Middle East amid an internal investigation into failures to follow anti-money laundering protocols. This followed a £9.4 million fine in 2022, then the third-largest penalty in British gambling history, related to failings that allowed customers to accumulate huge losses during the pandemic.
Further back, in 2017, the Gambling Commission issued 888 with a then-record £7.8 million fine after more than 7,000 individuals who had voluntarily self-excluded from gambling were still able to access their accounts.
The Prospective Acquirer: Bally's Intralot
Bally's Intralot, the US casino operator involved in the takeover talks, is a significant player in the global gambling industry. The company was acquired by Greek firm Intralot in a €2.7 billion deal last year and is listed on the Athens Stock Exchange. Bally's boasts a diverse portfolio of brands, including the online casino Jackpotjoy, alongside a string of US casinos and resorts. It also operates a casino in Newcastle and holds the front-of-shirt sponsorship for Nottingham Forest Football Club.
In accordance with City takeover rules, Bally's must confirm by 5pm on 18 May whether it intends to proceed with a formal offer or withdraw from discussions. The outcome of these talks will be closely watched by investors and industry analysts, as it could signal a major consolidation within the gambling sector and provide a potential lifeline for the struggling Evoke group.
