Terra Firma

William Hill

Description

William Hill was the UK's second largest chain of sports betting shops with approximately 1,500 licensed betting outlets and a leading telephone betting business.

Strategy

There was widespread concern amongst potential buyers that the advent of the UK's National Lottery was cannibalising other types of betting. In the period since the National Lottery had started, other forms of gambling had suffered a sharp loss of popularity.

However, Terra Firma identified that the National Lottery in fact represented a substantial long-term opportunity for the betting industry, in that it had legitimised gambling and generated pressure to relax certain of the severe restrictions applied to the gambling sector. Terra Firma also identified that the predictability of the business's cash flows would enable a refinancing shortly after acquisition, leaving it with the equity upside at relatively low cost and risk.

Outcome

The William Hill investment has been fully realised. The business was prepared for a flotation, which was withdrawn when Terra Firma received a higher offer from a private equity consortium, to which the business was sold in February 1999.

« Back to portfolio