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James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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Tom Waterhouse sells to British bookmaking giant in deal worth up to $105m

Published 09 August 2013 08:29, Updated 12 August 2013 07:30

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Tom Waterhouse sells to British bookmaking giant in deal worth up to $105m

Tom Waterhouse hasn’t received as much as expected for his punting business. Photo: Rob Homer

Controversial bookmaker Tom Waterhouse has sold 100 per cent of his online punting business to British bookmaker William Hill in a deal that could be worth as much as $105 million.

Under the terms of the deal, Waterhouse will receive $34 million up front, and could receive a payment of as much as $70 million, providing his business achieves earnings before interest and tax of between $10-30 million in the year to December 31, 2015 (the earn-out payment will work on a sliding scale).

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William Hill will also assumed $6 million of Tom Waterhouse’s debt under the deal.

The sale comes after a lengthy process. Originally, Waterhouse was seeking to sell a 50 per cent stake in the business for as much as $100 million, but the William Hill deal will see him sell the business in its entirety for a much lower price.

William Hill already has a substantial presence in Australia, thanks to its acquisition of Sportingbet Australia in March for $670 million.

Chief executive Ralph Topping said in a statement that the Waterhouse deal would help cement Australia as the company’s “second home”.

“The Sportingbet acquisition gave us a strong and proven platform with an experienced management team. Acquiring tomwaterhouse.com gives us a rapidly growing business that appeals to a wider customer base.”

Tom Waterhouse praised Topping and his team for transforming the British high street bookmaking industry.

“Our customers will benefit from us being able to offer a more extensive product range than before and from the kind of innovations that William Hill has already brought to the UK market. We will be able to use shared resources and get access to great technology that will help us continue to improve the customer’s website and mobile experience. I look forward to working closely with William Hill’s management team in Australia to capitalise on this opportunity.”

According to a report in Britain’s Telegraph newspaper, analysts at JPMorgan Cazenove estimate the Tom Waterhouse business has a 5 per cent share of the Australian online sports betting market.

“We believe that the two customer lists would be complementary, and see significant scope for cost-cutting (particularly on marketing spend) if WMH [William Hill] were to acquire Tom Waterhouse,” the broker said in a note.

“The acquisition would also take WMH’s Australian online market share (by turnover) to around 25 per cent, ahead of Paddy Power’s Sportsbet business.”

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