William Hill rejects £3.6bn takeover offer from Rank Group and 888 Holdings

Francesca Washtell
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William Hill has waved goodbye to the offer from 188 and Rank Group (Source: Getty)

The William Hill board has unanimously rejected a takeover offer from Rank Group and 888 Holdings that it said "significantly undervalued" the bookmaker.

In a statement, William Hill confirmed it received a £3.6bn proposal from a Rank and 888 consortium, which was first reported this morning.

The offer, which valued William Hill at 364p per share, was at a 16 per cent premium of its 314p share price on 22 July, the last trading date prior to the announcement of a possible offer by the consortium, and an 11 per cent premium of its 327p share price yesterday.

After a review with its financial advisers, Citi and Barclays, the board rejected the offer this afternoon.

The offer from Rank and 888 proposed creating an all-share merger between the two smaller companies to form a new group called BidCo, which would also offer to acquire William Hill for cash and newly-issued shares in BidCo.

William Hill said it had taken into consideration "the substantial risk" for its shareholders presented by the proposal. It cited the "highly complicated" three-way combination at a low premium with BidCo assuming approximately £2.2bn of leverage in order to fund the cash element of the consideration and refinance existing debt within the three companies.

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William Hill chairman Gareth Davis said: "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."

The ailing bookmaker has been perceived by many as a takeover target as it has battled to break into the online betting market but has been losing ground to rivals.

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Last week it snapped up gaming software firm Grand Parade to try and keep up with the digital shift.

In July, chief executive James Henderson announced he would step down after failing to turn the group's online operations around and a difficult start to 2016.

William Hill is the only major UK bookmaker that has yet to consolidate, despite a wave of mergers and acquisitions that have swept the gambling industry.

These include the tie-up between Paddy Power and Betfair, which completed in February this year, and an ongoing merger between Ladbrokes and Gala Coral.

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