Playtech partnership with William Hill on brink of breakup

William Hill has an option to buy Playtech's stake in William Hill Online in October 2013. The current dispute could bring the exercise date forward.

Israeli employees of William Hill Online, the joint venture of Playtech Cyprus Ltd. (AIM:PTEC) and William Hill plc (LSE: WMH) walked off the job last Sunday to protest the resignation of William Hill Online chief marketing officer Eyal Sanoff, and the company's alleged plan to move the Israeli operations to the tax haven of Gibraltar.

William Hill has an option to buy Playtech's stake in William Hill Online in October 2013. The current dispute could bring the exercise date forward.

Playtech, controlled by Teddy Sagi, and William Hill set up William Hill Online three years ago. William Hill owns 71% of the venture and Playtech owns 29%. William Hill Online became a goose that laid golden eggs, and its parent companies enjoyed steadily increasing revenue and profits from the venture.

Playtech therefore set up a marketing and technical support center for the venture in Tel Aviv, which currently has 185 employees. These employees are protesting Sanoff's resignation due to disagreements with William Hill. Sanoff reportedly plans to sue the company for breach of contract and making his work impossible.

In addition rumors spread at the Tel Aviv office that William Hill plans to close it down and move it to Gibraltar. Last Sunday, none of the Tel Aviv employees showed up for work, and fewer than 20 appeared on the two subsequent days. The employees apparently dismiss an e-mail from William Hill Online CEO Henry Birch that the employees' jobs were safe.

In a statement to the London Stock Exchange on October 18, William Hill said, "Senior William Hill Online management are currently on the ground in Tel Aviv working through these issues." British media reports say that William Hill CEO Ralph Topping, Birch and William Hill Online COO Jim Mullen went to Tel Aviv. Topping met with Playtech CEO Mor Weizer last Friday.

Although William Hill declares that it has no intention of closing the Tel Aviv operations, sources told "eGaming Review" that William Hill Online took away the authority of Israeli managers ahead of the transfer of operations to Gibraltar. Mullen has temporarily taken over Sanoff's responsibilities. In a statement, William Hill said, "Several other senior managers in Tel Aviv are now subject to disciplinary actions in relation to the disruption this week within the marketing business in Tel Aviv, and in the customer service and back office operations in Manila and Bulgaria."

In a statement to the London Stock Exchange, Playtech said, "As a minority shareholder in William Hill Online, Playtech is in dialogue with the William Hill group regarding these operational issues."

Sanoff is an associate of Sagi. He resigned because he would not give William Hill daily access to the computer at the Tel Aviv office of William Hill Online. William Hill gave the Tel Aviv office until September 30 to comply with its demand; Sanoff quit three days before it came into effect.

The "Daily Telegraph" reports that when Mullen arrived at the Tel Aviv offices, he was locked out and the e-mail and telephone systems were taken down. He and Birch were directed to a local beach. The paper quotes a source as alleging that Sanoff had earlier told Mullen that he was only at William Hill Online to protect Teddy Sagi's interests. The paper also quotes Topping as saying, "If there's one guy who could put an end to this with one phone call, it's Teddy Sagi."

Playtech's share price fell 0.5% on London’s Alternative Investment Market (AIM) on Friday to ₤2.43, giving a market cap of ₤588 million.

Published by Globes [online], Israel business news - - on October 23, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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