Amaya and William Hill Merger Falls Through as Key Shareholder Vetoes NegotiationsPublished October 18, 2016 by Ivan P
Amaya and William Hill merger negotiations fell through after a majority William Hill shareholder expressed its vocal disagreement.
Amaya and William Hill, two online gambling giants, officially announced their merger negotiations last week. The potential deal, which was set to be signed as a "merger of equals" and create a new company with a huge potential, is not going to happen after all.
Key William Hill Shareholder Blocks the Deal
Parvus Asset Management, a hedge fund owning 14.3 William Hill shares, made it very clear last week they were against the merger. The fund sent out the letter to the William Hill board of directors, stating they were ready to actively stand against any official proposal which would formalize the merger.
As the biggest shareholder in the company, Parvus insisted that William Hill should not waste time discussing the merger that could only further damage the brand. They did not fail to mention the fund has been supportive of the company despite its recent struggles and less than impressive performance of their shares.
The letter also mentioned the fact Amaya is currently facing a lawsuit in Kentucky and they could be on the line for $870 million if the court finds them guilty of breaching the UIGEA during mid 2000's, when PokerStars offered their online poker services to the USA residents.
William Hill Backs Out
In the immediate response to the letter, a William Hill representative made it clear that the board will not enter any partnerships or agreements that are not supported by all major shareholders. It was a prelude for what has become official a couple of hours ago.
William Hill published an official press release, stating that they were withdrawing from the merger discussions, wishing Amaya all the best for the future.
While both companies initially believed the partnership would help them establish their respective positions in the market, Parvus Asset Management clearly did not share this view, claiming that the merger had "limited strategic logic," insisting negotiations should come to an immediate end.
Facing the pressure from its major shareholder, William Hill board of directors decided to back out from the negotiations.