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
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Text messaging changes as a relationship evolves
life
News
The comedian, 42, made the controversial comment following the athlete’s sentencing to five years for the culpable homicide of Reeva Steenkamp on Tuesday
peopleComedian's quip about Reeva Steenkamp was less than well received at music magazine awards
Sport
Cristiano Ronaldo in action for Real Madrid
football
News
peoplePerformer had recently been diagnosed with prostate cancer
Life and Style
food + drink
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

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

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

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

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Day In a Page

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?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?