Were it in a less toxic industry, there might be an outcry about the sale of William Hill to a foreign predator.
After all, the company has been highly innovative.
What a shame its advances are in the field of online gambling technology, which makes it trickier to argue it’s a great British business that should never be flogged to the Americans. The UK has led the field in internet gaming, which has boomed during the pandemic. Our Gibraltar-loving gambling firms have also been pioneers in tax minimisation. Now we are exporting that expertise to the US.
Up in lights: The offer of 272p a share for William Hill from US casinos operator Caesars looks a pretty good one for investors
The offer of 272p a share for William Hill from US casinos operator Caesars looks a pretty good one for investors.
Chairman Roger Devlin, who has tidied up at William Hill over the past couple of years as well as sorting out the mess at housebuilder Persimmon where he is also chair, deserves some credit here.
True, shares leapt above the offer level yesterday. But in March when the first lockdown began, they were trading at less than 40p. There was a placing as recently as June at 128p. Hopes for a higher price centre around the US side of the business, which has the potential for explosive growth after the liberalisation of gambling in many states. But that is only 8 per cent of the business overall and there are substantial regulatory risks. The US is relaxing controls on gambling but could switch back in the opposite direction if the experience here is anything to go by.
The deal, along with the other corporate activity in the sector, will focus attention on some of the vast personal fortunes being created from UK gambling enterprises and prompt calls for tougher regulation.
Among the big winners at William Hill are the billionaire Done brothers, Fred and Peter, who have a 6 per cent stake. The septuagenarian siblings, who founded Betfred, have seen the value of their holding soar. Other gambling bosses have made enormous piles. Denise Coates, the founder of privately-owned firm Bet365 paid herself £323m last year. GVC, which owns Ladbrokes Coral faced a shareholder rebellion two years ago over payments of £67m to two top bosses.
At the same time there is a stream of distressing cases of gambling addicts driven to suicide, including that of 25-year-old engineer Chris Bruney, who took his own life after running up huge debts. This speaks of an industry that is highly vulnerable to clampdowns and boycotts by ethical investors.
Any gambler knows the value of quitting when they are ahead.
Moving in the opposite direction to William Hill is supermarket chain Asda, which may be heading back into British hands after two decades as part of the US Walmart empire. The Issa brothers, a pair of petrol station billionaires based in Blackburn, are the front runners.
Grocery giants ought to have been able to cash in during the pandemic but the big three, Sainsbury’s, Morrisons and Tesco, have seen their share prices fall this year.
Partly that is due to increased costs for hiring staff and making their stores Covidsafe, partly down to competition from online and from discounters. Ocado, which has just embarked on its joint venture with M&S, is the stand-out success: its shares have more than doubled since the start of the year.
The German cut-price operators Aldi and Lidl are the other great threat, with the latter announcing yesterday its biggest-ever investment in the UK.
All three traditional operators are under pressure but the Asda deal puts the spotlight on Sainsbury’s, whose own plans for a multi-billion pound merger unravelled. If it doesn’t come up with a convincing new strategy, it could become a target for private equity itself, as it has been in the past.
Supermarkets are getting exciting.
Some relief for troubled HSBC has come after its largest shareholder, Ping An Asset Management, increased its stake.
The shares rose by 9 per cent, but I stick by my view the bank is in deep crisis. The increase merely compensated for a similar plunge last week and since the start of the year, the shares have halved. Some interpret the Ping An stake as a sign China, which is said to be considering branding the bank an ‘unreliable entity’ may be softening, but other experienced investors are less sure.
Ping An’s move brings some relief to chief executive Noel Quinn, who will be hoping other investors will gain heart. But one swallow doesn’t make a summer.