Casino and bingo hall operator Rank Group and online gambling business 888 yesterday pressed for talks with the board of takeover target William Hill despite their £3.16 billion takeover proposal being rejected by the bookmaker.
The two suitors said the current cash-and-shares proposal worth 364 pence per share, as they also divulged expected costsavings from any merger of £100 million a year, would create a “transformational force” in the global betting industry.
In a statement, the two firms said: “888 and Rank believe the proposal represents a compelling value creation opportunity for William Hill and its shareholders and would welcome the opportunity to engage with the board of William Hill on a constructive basis, with the goal of consummating a recommended transaction.”
It came after William Hill’s board unanimously rebuffed Rank and 888’s offer proposal on Tuesday, saying it “substantially undervalued” the company.
William Hill had said the offer was “unsolicited” and highly conditional, and it did “not believe” it would deliver superior value for its shareholders.
The offer proposal also involves saddling the newly formed company with more than £2bn of debt. But Rank and 888 said in yesterday’s statement that a three-way marriage would create “the UK’s largest multi-channel gambling operator by revenue and profit with a complementary combination of retail and digital brands and proprietary technology, content and products across sports betting, casino, poker and bingo”.
They said a merger would also give “significantly enhanced scale and diversification”, increased marketing effectiveness, effective entry into new markets, and “mitigation against any adverse regulatory change”.
The proposed three-way deal involves 888 merging with Rank in an all-paper deal, and then 888 buying the bookmaker for 199p in cash and 0.725 new 888 shares per William Hill share.
Rank and 888 said that the cost synergies would include a reduction in fees payable to third parties arising from the de-duplication of gaming and sports betting operations, IT savings following use of a common technology platform, and “consolidation of corporate and central costs” including contact centres and other support functions.
They said there would be a one-off £69m charge to achieve overall synergies.