StockMarketWire.com - Betting firm 888 has entered into an agreement with Caesars Entertainment to acquire the international (non-US) business of William Hill at an enterprise value of £2.2 billion.

888 commented that the deal 'will create a global online betting and gaming leader by bringing together two highly complementary businesses and combining two of the industry's leading brands'.

Adding that it 'represents a transformational opportunity for 888 to significantly increase its scale, further diversify its product mix and accelerate the upward shift of its revenue growth profile'.

Pre-tax cost synergies of £100 million a year are flagged and on a pro-forma normalised basis the combined entity would have delivered revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of $2.5 billion and $464 million respectively.

To the fund the deal the company secured debt financing from JP Morgan, Morgan Stanley and Mediobanca of around £2.1 billion.

It plans a £500 million equity raise to reduce its net leverage ratio below four times with a medium-term target to reduce this below three times.

The board currently expects no changes to 888's existing dividend policy (50% of adjusted net profits) following completion of the deal.

888 expects to publish a combined circular and prospectus for the acquisition and capital raise, including the notice of general meeting in early 2022, completion is expected to occur in the first half of 2022.

888 has the support of its main shareholder Dalia Shaked Trust which owns 23% of its shares.

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