* Talks abandoned less than two weeks after announcement
* Sector consolidating as more gamblers go online
* European rivals have already joined forces
* Amaya FY revenue forecast below market expectations
* Amaya shares drop 8.3 percent
(Adds share move, Amaya spokesman comment)
By Kate Holton and Simon Jessop
LONDON/TORONTO, Oct 18 William Hill and
Canadian online gambling company Amaya Inc have
abandoned merger talks, leaving the British bookmaker struggling
to find a partner in a fast consolidating industry.
Amaya, operator of the PokerStars website, and William Hill,
one of the best-known British gambling brands, said earlier this
month they were in talks about a merger of equals but the deal
was thrown into doubt days later when a leading investor in
William Hill said it would oppose the plan.
The Canadian company said it had decided it could best
deliver shareholder value by remaining an independent company,
while William Hill said it decided to walk away after canvassing
its biggest investors. Amaya shares tumbled 8.3 percent.
William Hill investor Parvus Asset Management, which came
out against the Amaya deal last week, welcomed the news.
"We're pleased that the board has decided to cancel the
talks with Amaya, and, from our perspective, we're looking
forward to working constructively with the board with regard to
creating shareholder value for William Hill owners," Parvus
co-founder Mads Gensmann said.
William Hill is looking increasingly isolated after European
rivals Paddy Power and Betfair joined forces, while
Ladbrokes agreed to unite with unlisted Gala Coral.
Betting companies are facing tighter regulation and higher
taxes in countries such as Britain and need to adapt to an
environment in which younger and more tech-savvy gamblers are
increasingly betting online or via smartphone.
Amaya, which had been evaluating strategic alternatives
since earlier this year, said it has ended that process. It had
also received interest from GVC Holdings and private
equity firms, sources have told Reuters.
"It was a pretty intensive process, and we had a number of
interested parties at various stages and in various depths,"
Amaya spokesman Eric Hollreiser said.
"It was the conversations with William Hill that progressed
the furthest," he said. "We thought at the time, and in fact
still think at this point, that there's a lot of strategic and
industrial logic to the potential pairing."
LOOKING FOR ALTERNATIVES
William Hill appears to have lost momentum after
long-serving Chief Executive Ralph Topping left the company two
years ago. His successor James Henderson departed in July after
the board said he was failing to deliver enough growth in online
and international gambling.
The company subsequently rejected a joint takeover approach
from smaller online rival 888 and casino and bingo hall
operator Rank Group in August.
That turned the tables on William Hill which had made a 720
million pound ($895 million) bid for 888 last year.
In a statement on Tuesday, William Hill said it was focusing
on the priorities set out by interim CEO Philip Bowcock: online,
technology, efficiencies and international.
It said the company would "continue to consider strategic
alternatives where they have the potential to create shareholder
Its shares added 1.5 percent to 309.6 pence, valuing the
company at around 2.65 billion pounds.
Amaya said it had been informed by its former chief
executive, David Baazov, that he remained interested in buying
the company but that the firm had not received an offer capable
of resulting in a transaction.
Amaya said in February it had received a non-binding
proposal from Baazov to take the company private, but the formal
bid never came.
Amaya also said on Tuesday it expects to report full-year
revenues of between $1.13 and $1.16 billion, lower than the
average forecast of $1.17 billion, according to Thomson Reuters
I/B/E/S. The company expects earnings to be between $1.71 and
$1.82 per share, compared with an average forecast of $1.72.
($1 = 0.8042 pounds)
(Additional reporting by Matt Scuffham, John Tilak and Alastair
Sharp in Toronto; Editing by Keith Weir, Frances Kerry and