Wednesday, December 5, 2012

SportingBet gets Kicked in the Nuts

After yesterday's deadline we saw a lower proposal from William Hill and GVC for the takeover of Sportingbet.  I have my largest stake in SBT in my portfolio; and so takes a significant hit in terms of expected returns.

The official annoucement: http://sportingbetplc.com/news-and-media/news/2012/04-12-2012
GVC share price: http://www.google.com/finance?q=LON%3ASBT&ei=18m-UKqwMdCZlQWeHg

The revised deal comes in at 55.1 including the 1.1 pence dividend that is coming up in December.  The final date for the offer will be 18 December 2012.  The price being lower than the original 61.1p offer that we were looking at just one month ago.  The fact that the board is backing this lower revised bid, when they originally rejected a 51.1p bid, does show their commitment to getting a deal done.

Some positives:
- There's still an offer on the table; and it's likely to get done if shareholders vote yes.
- 11% of SBT shareholders have already agreed to take most of the GVC part of the offer as part of their holdings, which is 0.04 per every SBT share held.
- The yes is vote is also likely given that the offer comes on the 35% drop in earnings, which in the normal business conditions would be negative, but given the euro uncertainty, the lack of major events in the 3q, and the fact that most users in SBT that have had good streaks will usually come back and add to the margins in the next quarter.