William Hill issues legal complaint over Scientific Games & NYX merger
William Hill plc has announced that it has filed a legal complaint against NYX Gaming over its proposed merger deal with Scientific Games.
The on-going dispute heated up last week when the UK bookmaker first threatened to scupper the merger between Scientific Games and NYX Gaming. William Hill first wanted to block the deal as it deemed the proposed commercial agreements of the merger unfavourable. This threat saw NYX Gaming shares plummet by 18% last week due to the uncertainty over the deal. NYX issued a statement that made the bookmaker’s intentions public.
The bookmaker is a minority shareholder in NYX Gaming and has now taken legal action to demand a formal vote on the deal. To determine a vote, the bookmaker has demanded that its convertible preference shares in NYX are converted into normal shares by 4 December 2017. This would give William Hill 32% voting stock in the company, allowing them to vote on the proposed deal.
Converting the shares would reportedly deny Hill’s shareholders a 112pc premium on NYX shares prior to the public deal, which could cost £38m.
Analysts have pointed out that the commercial agreements the bookmaker is concerned over likely refer to NYX’s OpenBet platform. OpenBet is a technology provider for the bookmaker and William Hill had invested £90m in NYX so it could acquire OpenBet in the summer of 2016. William Hill is reportedly concerned that the acquisition of NYX could result in it losing the priority customer relationship with OpenBet that it currently enjoys. Reports at the time suggested that should these rights and commercial arrangements be secured, William Hill would approve the takeover.
However, the bookmaker’s actions likely also stem from a joint proposal from NYX and Scientific Games to release a new sports betting platform for the US market. With gambling laws currently being reviewed in a number of states, the US could soon become a lucrative market for operators. William Hill currently has a 55% market share in Nevada, but a planned court hearing to legalise gambling in New Jersey could soon mean that more states will allow gambling, opening the market up to competitors.
NYX Gaming takes legal action of its own
On Friday last week, after an apparent breakdown in communication over the commercial arrangements, NYX announced that they too are taking legal action, by claiming that William Hill is violating anti-trust and anti-competition laws and is illegally trying to block the merger.
In a statement, NYX Gaming said:
NYX alleges that its shareholder William Hill has engaged in wrongful conduct in violation of the New Jersey Antitrust Act in attempting to block the Acquisition, which will bring great benefits to the nascent regulated sports betting industry. The complaint seeks injunctive relief, treble damages and attorney’s fees for violations of the New Jersey Antitrust Act, and also alleges tortious interference with economic advantage, and tortious interference with contract, and seeks punitive damages.– Spokesperson, NYX Gaming
The statement also announced that the shareholder vote on the deal has been delayed until 20 December 2017.