As Evoke faces a challenging mix of regulatory shock, financial leverage and shareholder expectations, analysts consider the operator’s best exit options.
Navigating through an extremely turbulent regulatory landscape has put additional pressure on Evoke plc, the London-listed owner of William Hill’s UK retail estate and a stable of online brands including 888 and Mr Green. As it works through what could be considered an existential crisis for the operator, stakeholders consider whether a private equity buyout is Evoke’s best option.
In December 2025 Evoke announced that it was conducting a strategic review. The board said it was considering “a range of potential alternatives to maximise shareholder value, including, but not limited to a potential sale of the group, or some of its assets and/or business units”. The language was conventional. The backdrop was not.
Weeks earlier Britain’s budget delivered what Deutsche Bank described as a “hammer blow” to the sector. From April 2026 remote gaming duty in the UK will rise from 21% to 40%. Around 40% of Evoke’s revenue and EBITDA are generated by its UK online division. Management estimated an annualised pre-mitigation impact could hit £125m–£135m, roughly 30% of its FY27 EBITDA on pre-budget consensus expectations.
Evoke downgraded by Deutsche Bank
In January Deutsche Bank downgraded Evoke’s shares to “hold”. Richard Huber, DB research analyst, wrote that the UK budget had “disproportionately impacted Evoke”, given its exposure to UK online. Management has guided to “c.50% mitigation on a medium term view” through supplier savings, reduced marketing, retail store closures, opex savings and changes to the customer proposition.
Huber cautioned: “Clearly there will be some uncertainty on the timing of delivery of some of these savings,” and the bank estimates only about 40% — around £50 million — can be mitigated in the first year.
The earnings consequences for Evoke are severe. To reflect the pending tax increase, Deutsche Bank cut its FY26 and FY27 EBITDA forecasts by 12% and 18%, respectively. Because of high financial leverage, earnings per share falls by 40% and 52%. And the bank now assumes UK online growth of just 2.5% in FY26 and FY27, with margins falling from 23% in FY26 to 13% by FY27.
An additional burden is the company already has a lot of debt, and it is becoming more stretched financially. Net debt to EBITDA is expected to rise from 4.8x in FY25 to 5.1x in FY26, easing only to around 4.5x by 2028. Over the next three years combined, the company is expected to generate about £100 million in spare cash after capital expenditures.
Paying back its loans
Even if its Italian-facing business were sold at around 8x EBITDA, Deutsche Bank says, leverage would “still” be too high ahead of the group’s next major refinancing which “could be within the next 12 months”, including a $575 million term loan B that must be fully repaid by March 2028.
With Evoke’s shares at 26.35p on 21 January, down sharply from a 52-week high of 73.90p, Deutsche Bank’s note concluded: “We expect the shares to remain highly volatile, given the equity represents c.5% of Enterprise Value, hence our new Hold recommendation”. Key risks include leverage, cash flow and assets sales/bid speculation.
Who might buy, and why?
The strategic review poses a simple question: who, if anyone, can write Evoke a cheque?
Ben Robinson, managing partner at Corfai, argues that private equity is the most credible buyer for the group as a whole. “The balance sheet narrows the field considerably,” he says. UK-listed peers face competition and regulatory complications and US strategics are likely to be selective and asset-specific. And retail-focused operators don’t have the financial capacity to fund a full takeover.
“Large-cap PE, by contrast, can absorb the leverage, take the business private and do the heavy lifting [like] restructure costs, simplify the footprint, lean harder into technology and international growth and deleverage over time. Those are all things Evoke struggles to do efficiently in the public markets with this debt load,” Robinson explains.
On paper, Robinson concedes, one can argue that a breakup yields a higher sum-of-the-parts valuation. “In practice, I think a whole-group sale delivers a better outcome for shareholders,” he says. “Trying to dismantle the business publicly introduces execution risk, tax leakage and timing issues, and relies on a shallow pool of buyers who may not be able (or willing) to pay full value. A PE buyer can internalise that complexity post-deal and extract value more effectively.”
UK exposure
Evoke earns approximately two-thirds of its revenue in the UK and is therefore highly exposed to the increases in gaming and betting duty. Richard Williams, partner at Keystone Law, believes the retail business could be offloaded or separated, “as the 1,300 betting shops do not sit well with the online parts of its business”.
Taking a look across its European operations, Evoke’s Italian online business, alongside smaller Spanish, Romanian and Danish arms, are attractive. But, Williams warns, there are likely to be few bidders for the retail estate, which could be a financial liability. Any bidder for the entire business “will have to make some tough decisions in order to stabilise its finances, which may involve significant betting shop closures and redundancies”, Williams says. He sees Evoke’s online businesses in the UK and Europe being picked up by private equity, given that existing listed operators are trying to stabilise their own operations.
The weight on high-street economics
Evoke’s 1,300-strong UK retail estate — largely under the William Hill brand — is central to the debate. General betting duty on in-person bets remains at 15%, as it was not increased in the budget. Yet higher national insurance and business rates continue to weigh on high-street economics.
Robinson describes retail as “a declining asset”, adding: “It still generates cash, but the direction of travel is clear given taxes, regulations and consumer behaviour.” A £400 million–£600 million valuation, or roughly 4–6x EBITDA, “seems realistic given the strong headwinds”.
In that context, he adds: “Certainty and speed of execution matter more than chasing an extra turn of multiple, as delays tend to be value destructive through ongoing earnings erosion and widening buyer risk premiums.”
Williams is blunter: “It is likely that a large number of the 1,300 William Hill betting shops in the UK are not profitable and will need to be closed down or repurposed.”
The operator did confirm it was in the process of shutting down various retail shops in its Q4 trading update on 27 January. The sector more broadly had warned pre-budget that a remote gaming duty and betting tax hike could threaten the UK’s retail betting sector with an existential crisis, as operators were likely to shut down the less profitable part of their UK businesses.
Deutsche Bank’s own sum-of-the-parts valuation applies 6x EBITDA to UK online, 7x to international online and just 4x to retail, before applying a 30% leverage discount to reflect the balance sheet. The order is clear: retail is priced for steady cash flow, not for future growth potential.
What to cut – and what not to
Evoke’s management has outlined mitigation measures to soften the £125 million–£135 million tax blow, including supplier savings, reduced marketing and the retail store closures — Deutsche Bank estimates this could generate up to 20% in opex savings and changes to customer proposition. But execution risk is a serious concern.
As Huber noted: “Clearly there will be some uncertainty on the timing of delivery of some of these savings,” and the bank expects only around £50 million to be mitigated in the first year.
Williams doubts that mitigation measures alone will solve Evoke’s problem. “Many observers doubt that the claimed cost savings will be possible in practice,” he says. Given the group’s estimated £1.8 billion of net debt, “I doubt its lenders will want to see the profitable parts of the business sold off unless all of sale proceeds are used to reduce borrowing,” he says. Yet “by paying down debt from sales, this would not provide the funding required to rationalise the remaining parts of the business”.
Robinson argues that the real opportunity lies deeper. “Beyond retail disposals, the real opportunity is structural cost reduction rather than short-term cuts,” he says. “Operational consolidation, automation, AI-led efficiencies and selective outsourcing can deliver 10% sustainable savings without harming growth.”
By contrast, simply reducing marketing spend “tends to destroy long-term value”. Continued investment in technology and efficiency, he adds, is “precisely what a financial buyer would focus on post-acquisition”.
The tension is evident: long-term savings need investment, but the balance sheet doesn’t leave much flexibility.
The Italian dilemma
If Evoke has a jewel, it lies in its international division. Deutsche Bank believes the Italian-facing businesses generate around £60 million of EBITDA annually and are growing at mid-teens rates. Comparable assets have traded at around 8x EBITDA; a sale at that level “would reduce leverage by c.0.7x”, Huber writes. But it “would materially dilute group growth”.
Robin Chhabra, CEO and president of Tekkorp Capital, frames the choice starkly: “The UK tax hike has effectively broken Evoke’s capital structure. Regardless of the speculation around Intralot and other potential suitors, the debt load makes a whole-company sale mathematically challenging.
“The strategic play is a breakup. The jewel here is the International division; markets like Italy, Spain, Romania and Denmark offer double-digit growth and are untouched by the chancellor’s new duties. Selling these is the only quick route to deleverage. But let’s be clear: if they don’t achieve top-tier pricing, the remaining UK cash flows are unlikely to support the remaining debt. This reality points toward a deal with creditors that leaves current equity holders with very little upside,” Chhabra continues.
Williams poses a similar question from a different angle. The Italian, 888, Mr Green and other EU operations “are valuable and would be more easy to sell”, he says. But “would Evoke want to be left with just a UK-focused online business and retail betting shops, all of which may no longer be profitable?”
Selling growth to pay down debt may please creditors, but it could hurt investors.
Endgame scenarios for Evoke
Three possible outcomes could emerge for the operator.
The first is gradualism. This could look like closing loss-making shops, extracting supplier savings, trimming marketing, selling peripheral assets. And hoping mitigation and modest growth stabilise leverage ahead of refinancing. Yet Deutsche Bank’s modelling shows net debt to EBITDA peaking at 5.1x in FY26 and only easing slowly thereafter, with cumulative free cash flow of just £100 million over three years.
The second is a decisive breakup. As Williams puts it: “I think it’s more likely that the business will be broken up,” reflecting the uneasy fit between a large retail estate and a multi-jurisdictional online portfolio. But any buyer of the whole group “will have to make some tough decisions in order to stabilise its finances”.
The third is a publicly listed, private-equity or creditor-led recapitalisation. Robinson believes “large-cap PE can absorb the leverage, take the business private and do the heavy lifting”.
Chhabra is less optimistic about PE’s prospects under current financial realities. “The debt load makes a whole-company sale mathematically challenging,” he warns, and without top-tier pricing for disposals, the outcome may “leave current equity holders with very little upside”.
Evoke’s review was launched to maximise shareholder value. In a harsher tax regime and under a heavy debt burden, the more immediate task may be to preserve enterprise value. In the end, the company’s future may depend less on its brand or market position and more on its debt levels and when it needs to refinance.
