About two weeks ago, gambling firms 888 Holdings and Rank Group confirmed rumors that they were teaming up to put in a bid for rival William Hill, the largest gambling concern in the United Kingdom. On Tuesday, it was announced that they not only had, in fact, put in a formal offer, but that William Hill’s Board rejected it.
In a press release issued by William Hill (and found on the website of 888 Holdings, oddly enough), it was revealed that 888 and Rank would create a new company, BidCo, which would then make the acquisition offer to William Hill. The proposed purchase price was estimated at 364 pence per share of William Hill. This price is comprised of 199 pence in cash and .725 shares of BidCo per share of William Hill. The value of those BidCo shares is based on the closing prices of 888 and Rank on August 5th.
William Hill shareholders would have controlled 44.6 percent of the new company.
The offer valued William Hill at approximately £3.2 billion ($4.2 billion), which was not satisfactory for the UK bookmaker.
“Having reviewed the Proposal with its financial advisers, Citi and Barclays, the Board of William Hill has unanimously rejected the Proposal as it substantially undervalues William Hill,” the company said in the press release.
“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),” William Hill explained.
William also said that it doesn’t feel that the deal would even do it any good, as it would not “enhance William Hill’s strategic positioning or deliver superior value for shareholders compared against William Hill’s strategy.”
That strategy involves global diversification in both William Hill’s online and brick-and-mortar businesses.
William Hill’s Chairman, Gareth Davis, commented:
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.
888 Holdings, as readers of this site likely well known, operates 888poker.com, the internet’s second largest online poker room, according to PokerScout.com. Rank owns the Mecca Bingo and Grosvenor Casinos, the latter of which should be very familiar to brick-and-mortar poker players in the UK.
These latest financial rumblings are an interesting turnabout in the last few years’ gaming industry consolidation. William Hill was actually interested in purchasing 888 Holdings back in early 2015, but obviously nothing happened with that. 888 was also quite active last year, fighting against GVC Holdings in a failed effort to acquire bwin.party, parent company of partypoker.
