888 and Rank Pull Out of William Hill Takeover

Posted by Harry Kane on Thursday, August 25, 2016

After weeks of speculation over the future of William Hill, The Rank Group and 888 Holdings have officially abandoned their take-over attempt. In a joint statement released last week, Rank and 888 stated that they would no longer pursue the potential three-way merger, stating that “it had not been possible to meaningfully engage with the board of William Hill”.

The online gambling operator 888, and Rank, who operate more than 50 Grosvenor casinos and almost 100 Mecca Bingo clubs made a preliminary proposal to acquire William Hill in July. At that time, the consortium did not put forward any specific proposal relating to pricing, timing or how the three-way deal would be structured, yet William Hill confirmed that their board would “listen to and consider any proposal” which was made.

The consortium later put forward a £3.6bn takeover bid, which was unanimously rejected by the board of William Hill. The proposal was worth about 364p per share, and the board slated this offer, calling it an “opportunistic” bid that “significantly undervalues” the company. The consortium later reported that they had identified additional benefits of the merger that could boost the value of the takeover bid to 408p per share. The proposal included a complicated three-way merger, that would see 888 and Rank merge to form a new company called BidCo, which would in turn offer to acquire William Hill. Rejecting the bid, Gareth Davis, the chairman of the British bookie’s also stated that this complex merger would involve “substantial risk for William Hill shareholders”.

The takeover proposal came shortly after the board of the bookie’s ousted its Chief Executive, James Henderson. Having been appointed as CEO two years ago, the board questioned Henderson’s leadership, following the poor performance of its online business. However, the experience and expertise that could be provided by the online specialised operator 888 did not sway the opinion of the board regarding the proposed takeover bid.

The move by Rank and 888 is one of a series of recent upheavals in the gambling industry. The gambling giants Paddy Power and Betfair merged earlier this year, strengthening their position in the competitive market. A £2.3bn merger between Ladbrokes and the Gala Coral Group is also in the pipeline. This consolidation of the UK’s second and third largest high street bookmakers will see them overtake William Hill to have the largest number of betting shops in the UK.