UK and Ireland bookmaker William Hill plc has announced the filing of a legal complaint against the proposed acquisition of NYX Gaming by fellow gaming heavyweight Scientific Games.
William Hill, a minority shareholder in NYX gaming, has requested that its convertible preference shares be converted into ordinary shares of NYX no later than 4 December, 2017, to enable William Hill to vote in connection with the proposed acquisition. Any conversion would give William Hill 32% voting stock in NYX Gaming, allowing it to do so.
This move has been made by the firm “in order to protect the rights and interests of William Hill”; however numerous reports have suggested that the company is seeking to block the acquisition over concerns about the future potential revenue opportunities afforded by legalisation of sports betting in the US.
NYX subsidiary OpenBet would be ideally placed to take advantage of any relaxation in US sports betting legislation if the Supreme Court review, coincidentally due to take place on 4 December, were to call for the repeal of the Professional and Amateur Sports Participation Act (PASPA).
In a statement concerning the conversion, NYX Gaming said: “Based on certain regulatory and licensing restrictions, NYX’s Board cannot convert the preference shares at this time. NYX is considering all options available to it, including whether William Hill’s conduct could have any impact on NYX’s gaming licences (and therefore whether William Hill is suitable to hold NYX ordinary shares), and bringing appropriate legal action or actions against William Hill to protect NYX shareholders.
“The NYX Board also reaffirms its unanimous determination that the terms of the Acquisition are fair and reasonable and are in the best interests of NYX and its shareholders and its unanimous recommendation that NYX shareholders vote in favour of the Acquisition.”
William Hill reportedly will lose in excess of $50m by converting its shares and will deny its shareholders a premium payable following the acquisition, however the company remains undeterred in its desire to vote on the Scientific Games/NYX merger.
Issuing a response, William Hill said: “William Hill is considering the proposed acquisition of NYX by Scientific Games Corporation and no decision has been made at this time, and William Hill refutes in the strongest terms that any anti-competitive measure have been requested or are being demanded.
“William Hill confirms that it has issued a conversion notice to convert its holding of convertible preference shares and has commenced legal action in order that it may also vote such shares at the special meeting of shareholders. William Hill does not wish to make any further comment on those proceedings at this time, other to confirm that it will continue to act in the best interests of its shareholders.”
With both parties at loggerheads, legal action seems inevitable and could derail one of the biggest corporate mergers of 2017.