On Wednesday, the Toronto-listed NYX informed the markets that a division of William Hill – a major NYX shareholder – had asked to convert its NYX convertible preference shares into ordinary shares by December 4 in order that Hills could vote against Sci-Games’ proposed purchase of NYX. The vote on the C$775m (US $631m) deal is scheduled for December 7.
Hills contributed roughly £90m to the £270m price that NYX paid to acquire sports betting technology firm OpenBet in April 2016. OpenBet powers Hills’ sports betting platform, and the investment was seen as a way for Hills to ensure it remained a priority customer for OpenBet.
NYX’s statement claimed that Hills would only vote in favor of the Sci-Games takeover if Sci-Games first signed a commercial arrangement that ensured continuity of Hills’ sports betting operations. Failure to reach such an arrangement would mean that Hills “will vote against and therefore effectively block” the acquisition.
According to NYX, Hills’ alleged demands for this commercial arrangement include “rights to a copy of NYX source code and certain anti-competitive arrangements in US jurisdictions.” Hills has a thriving Nevada sports betting business and the US-based Sci-Games’ interest in NYX is viewed as a way of positioning itself for a future in which legal sports betting expands to other US states.
NYX’s statement notes that certain regulatory and licensing restrictions are preventing the company from converting Hills’ shares to voting shares by the stated deadline. Once fully converted, Hills would hold a nearly 32% stake in NYX.
NYX says its board remains focused on the Sci-Games deal but that it is considering “bringing appropriate legal action or actions against William Hill to protect NYX shareholders.” NYX shares lost over 15% of their value on Wednesday and are currently down another 1.5% in Thursday trading.
Hills issued its own statement in response to NYX’s “apparent determination to frustrate the contractual rights” Hills obtained via the 2016 OpenBet acquisition. Hills said it had yet to make any concrete decision on its plans regarding Sci-Games’ deal for NYX and added that it “refutes in the strongest terms that any anti-competitive measure have been requested or is being demanded.”