William Hill rejects takeover offer

William Hill has confirmed it has rejected a takeover approach from 888 Holdings and Rank Group, reasoning that “it substantially undervalues William Hill”.

Shares in William Hill rose yesterday after the Financial Times reported that Rank and 888 had teamed up to submit the offer, which set out cost savings to lift the value of the proposal to 408p a share.

“In addition, 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 global businesses”.

William Hill shares were at 324.9p in early trading, down 0.8%.

No-one was immediately available from Rank Group or 888 to comment on the report when contacted by the Wall Street Journal.

The complex proposal valued Hills at £3.6 billion, and would have comprised a merger of the Rank Group and 888, forming new company BidCo, that would have then acquired Hills for a combination of cash and BidCo shares.

The bookmaker has endured a troubled year, with James Henderson relieved of his duties as chief executive in a bid to arrest the firm’s decline following a profits warning. The proposed purchase price was estimated at 364 pence per share of William Hill.

A takeover of William Hill would mark a step up in betting industry deals that have included the pending merger of competitors Ladbrokes Plc and Coral. That transaction will create a business that would leapfrog William Hill as Britain’s biggest bookmaker. William Hill investors would own 44.6 percent of the combined entity, which would have annual revenue of about 2.8 billion pounds. A spokesman for 888 said: “We thought they were a bit rude about us but we have nothing to add”.

For 888, the takeover would mark a reversal of events after William Hill abandoned a possible offer for its online competitor in February a year ago.