The board of British bookmaker William Hill has unanimously rejected the £3 billion takeover bid from 888 Holdings and Rank Group, calling it “highly opportunistic.”
888 and Rank Group, the latter being the owners of the Grosvenor Casinos brand, joined forces in July and formed what they referred to as a “consortium.” A cash-and-shares proposal worth approximately 364p a share was offered for William Hill, which the William Hill board rejected.
Gareth Davis, the chairman of William Hill, 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.”
Had the big been successful, 888 would have merged with Rank, with the new company then buying William Hill. It would be a move involving approximately £2.2 billion in debt, which David described as “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.”
If completed, the deal would have created the United Kingdom’s third-largest online gambling company, one with annual revenues of around £2.7 billion.
888 and Rank now how until August 21 to make a firm offer for William Hill or walk away. Unless it is substantially more than the 364p a share initially proposed, a deal looks dead in the water.
888 Co-Founder’s Son Angered By William Hill’s Rejection
Eyal Shaked, son of Avi Shaked, one of the co-founders of 888, vented his anger on Twitter after William Hill rejected the takeover proposal, claiming that the rejection will be the “downfall” of William Hill.
Pure ego made #WilliamHill reject #Rank and #888 £3.16bn bid and that will be their downfall. https://t.co/51roD63iI9Follow @Eshaked
Although Mr Shaked does not own any of his family’s stake in 888, his family controls approximately 48 percent of 888 therefore its support for the William Hill bid is crucial. It is thought it was the Shaked family who rejected William Hill's takeover bid of 888 in February 2015.
Lead image courtesy of the ibtimes