888/Rank Give Up On William Hill Takeover

As we reported last week, it appeared that William Hill, the UK's largest bookmaker, had once again turned down a takeover bid from a consortium of 888 and Rank Group after the two smaller bookies increased their initial offer from earlier in the week. It seems that with no apparent serious interest coming from the board of William Hill, that the consortium have decided to abandon the merger bid altogether.

The lack of willingness of William Hill to seriously entertain the £3.5bn bid has clearly frustrated those at 888 and Rank, who believed that the merger of the three businesses would have brought "scale, diversification and strong revenue and cost synergies, from which all shareholders would have benefitted."

As it stands, William Hill will remain the UK's largest bookmaker although their recent financials haven't been the greatest, and, according to flushdraw.net they are still suffering from a "questionable penetration in the online sphere, the industry’s fastest growing segment."

A joint investor and regulatory advisory disclosing the abandoned effort has been issued by 888/Rank - see it in full below.

STATEMENT OF INTENTION NOT TO MAKE AN OFFER

888 Holdings Plc (“888”) and The Rank Group Plc (“Rank”) announce that they do not intend to make an offer for William Hill plc (“William Hill”) and are withdrawing their proposal for a possible combination of the three companies.

On 24 July 2016, 888 and Rank confirmed that they were evaluating a possible combination (the “Proposed Transaction”) of 888, Rank and William Hill (the “Enlarged Group”). 888 and Rank subsequently submitted non-binding proposals (the “Proposals”) to William Hill’s board on 8 August 2016 and 14 August 2016. Based on the closing price of the 888 shares on 5 August 2016 (the last business day prior to the submission of the first Proposal), the Proposals valued William Hill shares at 364 pence and 394 pence respectively before taking into consideration the expected benefits of cost synergies, revenue synergies or the potential re-rating of the Enlarged Group.

The Proposed Transaction would have created a transformational force in the global betting and gaming industry and the UK’s largest multi-channel gambling operator by revenue and profit and was expected to have unlocked substantial cost and revenue synergies.

Notwithstanding 888 and Rank’s belief in the inherent value of their Proposals, it has not been possible to meaningfully engage with the board of William Hill. 888 and Rank respect the William Hill board’s position and, as such, after careful consideration each now confirms that they have withdrawn their interest and that they do not intend to make an offer for William Hill.

Rank and 888 remain committed to enhancing returns to their shareholders through their respective focused strategic plans.

The line from William Hill was that they believed the offer(s) made by 888/Rank "substantially undervalued" the business, and that the bids were "highly opportunistic". In response to the withdrawal, William Hill said it plans to continue to focus on its own strategy to deliver value to shareholders with WH chairman Gareth Davies saying, "The team has a clear plan to grow by diversifying digitally and internationally and four priorites to get us there"

Since the withdrawal of the offer, William Hill's share price has actually risen substantially to the tune of around 3% as investors rally behind the UK gaming giant.