William Hill's Amaya merger looks like a bad bet

The bookie is talking to the PokerStars owner about an all share deal but both companies have problems and putting them together might make things worse

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The Independent Online

What price William Hill and Canadian online gaming group Amaya making a success of a merger? It looks like a long shot. 

The two gambling groups are having talks about an all share deal that would see the Amaya reversing into William Hill. 

The idea seems to be that if you put two troubled companies together, their respective good bits will paper over the cracks that are all to obvious to the observers of both businesses. 

Amaya, perhaps best known for its ownership of PokerStars, has struggled to grow its sports book, which is a William Hill strength.  

William Hill has struggled with online, something Amaya is good at, and wants to decrease the proportion of earnings from its slow growing retail betting ship estate. It also lacks a permanent chief executive, a role that could be filled by Rafi Ashkenazi, who has the job at Amaya. He got it after David Baazov, his predecessor, and the company’s co founder, resigned all his positions. Mr Baazov is fighting an insider trading probe. 

The entire gambling industry has been indulging in a veritable orgy of deal making while both these two have been left outside the party. That’s no fun! 

Prompted by the rising burdens of tax and regulation, and the need to cut costs and consolidate operations as a result, the two companies will presumably tell their investors that a marriage will solve those problems for them too. 

The trouble is, while sometimes one plus one makes two in the wake of mergers, and very rarely it can make three, it's more common for deals like this one to produce less than the sum of their parts.

“Look, there’s no one that wants to go to the prom with either of us. Shall we make it a date?”

I doubt that’s what whoever made the first approach said, but they might just as well have. There’s been a lot of rumoured interest in Amaya, including from GVC, private equity, even Mr Baazov. But no one’s actually gone as far as to ask for a date. 

William Hill, meanwhile, has a succession of failed marriages to its name. Most recently 888 and Rank knocked at its doors, only to be sent packing. 

Will getting together finally get these two to the ball? No one’s inquired about dress hire yet. Let's not forget that Amaya is fighting an $870m (£702m) penalty levied against PokerStars in Kentucky over its activities prior to Amaya’s ownership. Such battles against the US authorities don’t have a great record of success. So the odds are long on a deal going ahead, let alone on it succeeding. 

Both these companies have bad hands. The best bet for their shareholders? Fold