888 Holdings shares rose 18.5% to 227.6p in early afternoon trading after the company reported a price drop in William Hill’s non-US business from £2.2 billion to £1.95 billion.
The group said the alterations to the deal reflected the change in the macro-economic and regulatory environment since the transaction was first agreed, along with compliance issues including an ongoing review by the Gambling Commission of Great Britain (UKGC) impacting William Hill’s business dealings.
888 Holdings added that it expects the transaction to bring pre-tax cost synergies of at least £100 million, alongside £15 million in capex synergies by 2025.
The gambling firm noted that it presently anticipates the cumulative achievement of an estimated £5 million in synergies in 2022, with £54 million in 2023, £70 million in 2024 and £100 million in 2025.
The company also said it expects to incur one-time cash costs of around 100% of its annual pre-tax cost synergies, spread throughout the initial three years after the deal is completed.
888 Holdings confirmed that it has fully committed debt financing from several institutions, including J.P. Morgan Stanley, Mediobanca and Barclays Bank of around £2.1 billion, which will either take the form of senior secured term loans or alternative senior secured debt with the potential addition of junior debt and a fully-committed revolving credit facility of £150 million.
The betting company mentioned that in order to accelerate deleveraging, it is set to suspend dividend payments until the combined group’s net leverage ratio meets or is below 300%, or until the board decides to resume payments.