Posted 2/23/11 : Joint venture interests remain unaffected by litigation
Yesterday's surprise announcement by William Hill plc that it had secured an injunction against Playtech plc has been matched with a fast response from Playtech, brusquely pointing out that its interests in the William Hill Online joint venture are unaffected by the injunction.
Media speculation is already mounting that recent reports of a possible GBP2.2 billion merger between online and land gambling group Ladbrokes and Playtech are behind the Will Hill move. Industry commentators speculated at the time that William Hill was unlikely to be comfortable with such a development with an arch rival.
There have been suggestions that Playtech has been in contact with Will Hill proposing "significant" amendments to unspecified facets of the five year joint venture agreement between the two companies, in which the latter holds the lion's share at 71 percent, and Playtech 29 percent.
In terms of the original agreement, William Hill has an option to buy out Playtech after four and six years on an independent fair value basis. The agreement, signed in 2008, called for Playtech to provide Will Hill with its online casino and poker software solutions.
William Hill's chief executive, Ralph Topping has in the past indicated that he views bigger and better online operations as an essential part of his group's future planning.
Wednesday's statement by Playtech references the William Hill interim injunction and comments: "Playtech's interests in the joint venture remain unaffected by the interim injunction."
The joint venture has been an increasingly successful one for the partners, with Playtech receiving profits of Euro 30.8 million last year.
Although the full detail on William Hill's motivation leading to the injunction is not yet clear, sources have been quoted as opining that William Hill management wants to stop Playtech from selling software to a merger partner such as Ladbrokes, or changing any part of the original joint venture agreement – especially any revisions that would enable the Israeli company to collaborate with Ladbrokes – a major competitor for William Hill.