Rank Group and 888 Holdings have hit back at William Hill's rejection of their £3.6bn takeover offer yesterday, claiming the move would save £100m per year in cost synergies.
The consortium formed by Rank, the operator of Grosvenor Casinos, and online gambling giant 888 has not given up, saying it would still "welcome the opportunity to engage" with the bookmaker's board to strike a deal.
It said it had identified £100m in annual cost savings from significantly enhanced scale and diversification, increased marketing effectiveness and mitigation against any adverse regulatory change.
"Everything William Hill needs, we have on steroids," 888 chief executive Itai Frieberger told City A.M. "With the revenue synergies we could make this combination could generate a lot of opportunities for them."
The consortium proposed Henry Birch, current Rank chief executive, would head the newly-enlarged group while 888 chief Itai Frieberger would become the chief executive of the group's digital arm.
However, William Hill said last night that the proposal is “highly opportunistic, complex and poses significant risk for shareholders”. It added that the takeover would lead to the combined group “operating with substantially increased leverage of approximately £2.2bn”.
William Hill boss Gareth Davis said the board sees “no merit in engaging with a proposal that substantially undervalues” the firm.
The proposal, formally submitted yesterday, valued William Hill at 364p per share and proposed forming a three-way merger to form a new company, BidCo.
William Hill shareholders would represent 44.7 per cent of the enlarged group, with 888 and Rank shareholders representing 25.7 per cent and 29.6 per cent of the new group respectively.
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.
Chief executive of Rank, Henry Birch, told City A.M. that Rank and 888 would not look to merge if William Hill was not involved in the combination.
"I think at this stage we are focused on what we see as generating the most value for our respective shareholders. And actually, when we sit down and look at that the most value is created for those three sets of shareholders by a three-way combination," Birch said.
Earlier on today, a member of the 888 founding family, Eyal Shaked, vented his frustration with William Hill's shooting-down of the proposal on Twitter, saying the bookie had been driven by "pure ego".
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.
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.