William Hill rejects Rank and 888's ₤ 3.16 bn bid

Bookmaker William Hill has declined a ₤ 3.16 bn takeover bet9ja's welcome offer from online operator 888 and gambling establishment huge Rank.

The bid, in shares and cash, was called "extremely opportunistic" by Gareth Davis, chairman of William Hill, who said it did not show its real value.

The offer would develop the UK's third-largest online wagering group with incomes of ₤ 2.7 bn.

William Hill shares have increased 22% to 334p because 888 stated last month that it was thinking about a joint bid with Rank.

The bid would indicate 888 taking over Rank, with the newly formed business then buying William Hill.

Mr Davis said that it would include some ₤ 2.2 bn in debt. He stated: "It is a really intricate three-way mix at a low premium including considerable danger for William Hill shareholders: execution risk, combination threat and risks of materially increased take advantage of."

But Rank and 888 argue that its organization strategy would increase the company's value to approximately 408p a share - or ₤ 3.6 bn.

888 and Rank said that they see "substantial industrial logic in the combination, through combination of their complementary online and land-based operations, delivery of significant income and cost synergies, and from the expected advantages of economies of scale which will accrue to all investors."

Turnaround

William Hill stated that it was already seeing a turn-around in its own online service, and while a merger would bet9ja's welcome offer it access to 888's offshore markets it replied that it was already seeing development of 12% in its Australia operation and 49% in running revenues in the US.

William Hill tried and failed to acquire 888 in a ₤ 700m deal last year.

John Colley, a Professor of Practice at Warwick Business School said the quote "looks particularly opportunist as William Hill have lost their primary executive James Henderson after 2 years of frustrating efficiency with the yohaig code shares at a lowly 336p compared with the 364p offer.

"However William Hill is now in play and others may be together with enhanced offers and more cash.

"The industry is combining rapidly and William Hill, Rank and 888 will belong to that one method or another. For this promotion code factor, Rank and 888 ought to likewise look out."

Other mergers in the industry include Ladbrokes and Coral signing a ₤ 2.3 bn merger in July and Paddy Power and Betfair joining forces in September.

William Hill shares hit by profit alert

23 March 2016