No Deal…Parvus declares “no logic & no value” in William Hill-Amaya merger

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Mads Eg Gensmann – Parvus Asset Management

London hedge fund Parvus Asset Management (Parvus) has publicly stated that it will not back the merger of William Hill and Amaya Inc, declaring that it sees ‘little strategic logic’ in the £5 billion ‘all-stock merger of equals’.

Led by Danish financier Mads Eg Gensmann, Parvus is reported to be William Hill Plc’s largest investor owning approximately 14.3% of company shares.

Detailing Parvus concerns regarding the potential William Hill – Amaya merger (first announced 7 October) Gensmann stated that the deal would “destroy shareholder value”.

Both William Hill and Amaya governances have entered initial merger talks, with their boards assessing whether any deal can be pushed to investors. Updating stakeholders, William Hill’s board declared that an evaluation was needed as it sees co-synergies and product diversification with Toronto TSX-listed Amaya.

As William Hill’s largest investor, Parvus and Gensmann are reported to prefer an outright sale of the operator over any merger. Issuing a letter to William Hill’s board on Thursday Gensmann stated “We strongly encourage that the board and management stop wasting valuable time and shareholder resources pursuing this value-destroying deal.

“Instead, the board and management must focus on maximising value for William Hill owners, rather than Amaya shareholders, by considering all alternative options available, including a sale of William Hill.”

The hedge fund further argues that it sees little logic in William Hill governance evaluating a deal that offers less shareholder value (300p per share) than August’s proposed Rank-888 takeover (392 per share).

Gensmann further notes that a merger would see William Hill burdened by an increased net-debt of £2.8 billion, with governance having previously rejected Rank-888 tie-up stating key concerns regarding £2 billion debt levels.

Responding to Gensmann’s criticism of the merger, Amaya governance states that Parvus had been inaccurate in its assessment of the deal, stating concerns can be “can be dispelled through reading Amaya’s public filings, which will attest to the high-quality, consistent profitability and solid growth prospects of our business.”