William Hill, second only to rival Ladbrokes among the UK’s largest bookmakers, is rumored to be looking for an adviser to handle a possible floation of the business next year.
According to yesterday’s Sunday Times, William Hill is confident it can buck adverse trends in the public equity markets and pull off a successful flotation on the back of new taxation rules that are to take effect on January 1 2002.
That day will see the abolition of betting duty, which will give way to a 15 per cent tax on bookmakers’ gross profits. The change, announced in the UK Treasury’s last budget, means punters will no longer pay a nine per cent deduction on bets.
The new rules, expected to significantly boost the profitability of bookmakers, are good news for private equity firms CVC Capital Partners and Cinven, which jointly own William Hill. In 1999, the firms bought the business from Nomura International for £825m, after the Japanese investment bank cancelled a flotation plan.
According to the Sunday Times, William Hill is confident it can list its shares at a price that would value the business at £1.5bn.
In 2000, William Hill hired Salomon Smith Barney, the investment bank, to advise on financial strategy.
A spokesperson for Cinven today declined to comment on whether a possible flotation process was indeed gaining momentum at this point.
Developments will be watched with interest at Coral, a competitor to William Hill which is owned by private equity house Morgan Grenfell Private Equity. Market leader Ladbrokes, owned by the Hilton Group of hotels, will also be keeping an eye on its rival’s next move.