William Hill Rejects £3.2 Billion Acquisition Offer from 888 and Rank
William Hill, the United Kingdom’s largest bookmaker, announced on Tuesday that it received a £3.2 billion offer to be acquired by a Consortium consisting of 888 Holdings and The Rank Group. At the same time, William Hill also announced that its Board of Directors unanimously rejected the offer.
The potential bid by the Consortium was rumored in late July; both Rank and 888 confirmed that they were likely putting something together, saying, “The Consortium sees significant industrial logic in the combination, through consolidation of their complementary online and land-based operations, delivery of substantial revenue and cost synergies and from the anticipated benefits of economies of scale which will accrue to all shareholders.”
The offer was a part cash, part stock deal. 888 and Rank were to merge into a new company, BidCo, which would then buy William Hill. The bid was for 199 pence per William Hill share plus .725 BidCo shares per William Hill share. Based on the closing prices of 888 and Rank at the end of last week, the total bid came to 364 per share, or about £3.2 billion.
The Consortium would have held a controlling interest in the combined company, as William Hill shareholders would have owned 44.6 percent of the new gambling concern.
In a press release, William Hill said that the offer “substantially undervalues” company, explaining further, “The Proposal represents a premium of only 16% to the William Hill share price of 314 pence on 22 July 2016 (being the last trading date prior to the announcement of a possible offer by the Consortium) and a premium of only 11% to the William Hill share price of 327 pence on 8 August 2016 (being the last trading date prior to this announcement).”
“In addition,” press release said, “the Board of William Hill does not believe that a combination of William Hill with 888 and Rank will enhance William Hill’s strategic positioning or deliver superior value for shareholders compared against William Hill’s strategy, which is focused on increasing the Group’s diversification by growing its digital and international businesses.”
William Hill Chairman Gareth Davis also presented his opinion, saying:
This conditional proposal substantially undervalues William Hill, is highly opportunistic and does not reflect the inherent value of the business. It is a very complex three-way combination at a low premium involving substantial risk for William Hill shareholders: execution risk, integration risk and risks of materially increased leverage. The Group has a strong team to deliver against our strategy to grow our digital and international businesses so we strongly advise that shareholders take no action.
So, that’s a no, then?
888’s owner, Eyal Shaked, was not happy at the turn of events, saying on Twitter, “Pure ego made #WilliamHill reject #Rank and #888 £3.16bn bid and that will be their downfall.”
He followed that up with, “#WilliamHill Rejects #888 offer. That’s the last I want to hear about #888 shareholders not willing to go big.”
That last point may have been in reference to early last year, when William Hill actually made a £700 million bid for 888, an offer that obviously was not accepted.
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