Berenberg lowers William Hill to 'hold' following Caesars bid

Analysts at Berenberg downgraded bookmaker William Hill to 'hold' from 'buy' on Friday after the group accepted a $2.9bn takeover bid from the owner of Caesar's Palace.

Berenberg said that while the recommended cash acquisition at 272.0p per share for the entire issued share capital of William Hill was "materially above" its target price, the bid price was still below its expectations of an offer of 282.0p to 356.0p.

The German bank pointed out that the cash offer represented a roughly 57.6% premium to the stock's closing price before Caesar's initial approach on 1 September, a 25% premium to the day prior to the commencement of the offer period and an approximately 80.7% premium to the three-month volume-weighted average price per share of 150.5p.

"WMH's directors consider the terms of the acquisition to be fair and reasonable, and intend to recommend unanimously and unconditionally that shareholders vote in favour of the deal," said the analysts, who also upped their target price to 272.0p.

Berenberg added that it expects the offer to lead to the potential termination of the joint venture rights from Caesars to dissuade other interested parties.