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. Last Updated: 07/27/2016

Bookmaker Buys Rival for $1Bln

LONDON -- William Hill has agreed to buy Stanley Leisure's betting shops for 504 million pounds ($935 million) to become Britain's biggest bookmaker, the two companies said on Monday.

William Hill said that as a result of the deal it was scrapping plans to return 453 million pounds to shareholders, and issued a downbeat trading update, knocking its shares.

In early Monday morning trading, William Hill shares were down 1.5 percent at 517 pence ($9.90), the second-biggest fall on the FTSE-100 index of blue-chip British companies.

Shares in Stanley Leisure, Britain's biggest casino operator, were up 1.9 percent at 532 pence after the group said it would likely return about 300 million pounds to shareholders.

"Stanley shareholders are getting the better deal," analyst Greg Feehely at Altium Securities said.

"The price is mind-boggling -- 13.5 times historic EBITDA [earnings before interest, tax depreciation and amortization]."

The deal covers 624 betting offices in Britain, Ireland, the Isle of Man and Jersey and takes William Hill ahead of the previous market leader, Hilton Group's Ladbrokes.

"We can return at least 300 million pounds to shareholders and still have an ungeared balance sheet," Stanley Finance Director Colin Child said.

"We hope to update shareholders shortly after this deal completes in mid-June."

Stanley chief executive Bob Wiper said the group would retain and develop its international betting shops, but could sell its online betting operations following the deal.

"In terms of our e-businesses, we've said we'll review them in the light of this disposal, but we don't visualize them having a long-term future in the group," Wiper said when asked about plans for Stanleybet.com.

The group will now focus on its casino assets, he added.

William Hill said that in the 19 weeks to May 10, its gross win had been level.

"We've had quite a protracted run of bad horse-racing results and bad football results," Harding told a conference call.

"And we're looking at tough comparatives up until July," he added, referring to last year's Euro 2004 soccer championship, which generated 11 million pounds of gross win.

Wiper said a handful of other parties had expressed an interest in Stanley's British and Irish betting shops but an exclusivity agreement with William Hill had prevented them from talking.

Harding said: "We've put together a very strong deal here. I think it would be a hell of a big move for anyone to trump it and a hell of a big move for Stanley to walk away from it."

Analysts have speculated the deal could prompt a merger of Stanley's remaining casino assets with London Clubs International, as Malaysian casino firm Genting has a significant stake in both.

Harding said around 13 million pounds ($24 million) of cost savings would be extracted from the Stanley Leisure deal in 2006, including job losses at Stanley's headquarters and 5.5 million pounds from improved performance at its shops.

Between 30 and 50 shops might have to be sold to address competition concerns, he added.