William Hill and Playtech in Legal TussleBy: Mark Freedman, Wednesday February 23rd 2011
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In 2008 the British online gaming operator William Hill and the leading software provider Playtech had forged a partnership that created the online casino William Hill Online powered by Playtech. At that time William Hill chief executive Ralph Topping had called the agreement with Playtech as "transformational". Over the past two years this partnership has yielded returns for both William Hill and Playtech. But now something seems to have gone wrong somewhere because William Hill Online has obtained a court injunction against Playtech, its own partner.
Two reasons have been cited for William Hill taking this step. The first is Playtech's stated desire and attempts to significantly amend the current William Hill Online joint venture agreements. Also there have been speculative media reports regarding discussions between Playtech and Ladbrokes, which is a head on competitor to William Hill.
A statement released by William Hill stated that the injunction was a defensive measure to protect its legal rights under the William Hill Online joint venture agreements. The injunction prevents Playtech from selling any of its software to Ladbrokes and also prevents it from restructuring any part of the original joint venture agreement that could pave the way for any deal between Playtech and Ladbrokes. The William Hill spokesperson added that Playtech was aware of the injunction and that it would not affect the relationship between the two companies.
Playtech responded through a brief statement to the stock exchange that said that it had noted the announcement made by William Hill regarding the injunction against it. Playtech also confirmed that the injunction obtained by its partner would not affect its interests in the joint venture.
James Hollins, security analyst at Evolution Securities, opined that the injunction was posturing by William Hill to signal to Playtech that nothing would come out of its purported negotiations with Ladbrokes. Though both Playtech and Ladbrokes have denied that anything is cooking, media reports have indicated a possible £2.2 billion merger. The message that William Hill is sending out is that their existing agreement is highly beneficial to both partners and they should stick to it. On the other hand, Playtech's discussions with Ladbrokes, if true, could be posturing to compel William Hill to make some of the amendments sought by Playtech in their agreement.
William Hill is scheduled to release its annual results for the year ended December 2010 on Friday February 25. The industry will then come to know if really all is well at William Hill Online as claimed. Also the industry will expect Topping to go into more detail regarding the injunction and the Playtech partnership.
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