Investment: William Hill valued at pounds 525m for March float

WILLIAM HILL, the UK's second largest bookmaker, yesterday jumped the last hurdle in the race to the stockmarket when it revealed that its March flotation would value the group at up to pounds 525m.

William Hill, which is being sold by the Japanese bank Nomura at a profit of around pounds 170m, plans to sell 300m shares at a price of between 155p and 175p, valuing the company at pounds 465m to pounds 525m. Including debt, the group will have a total value around pounds 900m.

The final price will be set at the end of the month, with dealings expected to start on 1 March. According to the prospectus released yesterday, up to 10 per cent of the offering is earmarked for retail investors and it has already received 80,000 enquiries. However, small investors will have to buy at least pounds 1,000 worth of shares - a level that is likely to deter many of William Hill's customers.

But for those who can afford it, William Hill looks like a reasonably safe bet. Its main strength is the ability of its 1,500 shops to generate high cash flow.

City analysts believe that this will enable the company to fund the development of the business and guarantee a healthy level of dividends to shareholders. Cash, and the proceeds of the flotation, will also help to bring down debt from the current pounds 500m to a more manageable pounds 375m, with around pounds 112m tied up in high-yield bonds.

Another bullish point about William Hill, bought by Nomura just 16 months ago from the ailing conglomerate Brent Walker for pounds 700m, is its market- leading position in telephone betting.

Unlike the traditional paper slips, phone bets yield a higher margin because of the lower fixed costs and transaction expenses. Telephone betting, alongside numbers' games such as Lucky Choice, will be the main driver of growth in the next few years. With 41 per cent of the market and around 140,000 accounts, William Hill is well placed to benefit from growth in this section of the market.

However, the outlook for William Hill's betting shops, which account for the bulk of the company's turnover, is bleaker. Most experts forecast minimal or no underlying growth in betting shops' revenue as the market is near saturation andsuffering from competition with the National Lottery.

With Internet betting still a long way from becoming a sizeable contributor to earnings, some analysts see William Hill's reliance on betting shops as a drawback. The other threat to William Hill shares is the chance of a sudden rise in betting and levy duty - two of the main drains on the company's resources. Experts pointed out that William Hill could be hit hard from unexpected tax rises.

Broker Warburg Dillon Read is forecasting a profit before exceptionals of pounds 91m for 1999, putting the shares on a forward multiple of 11 to 12.5, depending on the final price. This is a discount to the market and to William Hill's main competitors, the market leader Ladbroke and the fourth- largest chain Stanley Leisure, even though valuations are clouded by Ladroke's hotels business and Stanley's casino operations.

Bruce Jones, leisure analyst at Merrill Lynch, said the shares were worth a punt but investors should not expect spectacular growth. "This will be a dull but worthy stock with a bit of added spice from telephone betting."

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?