William Hill rejects improved 888-Rank takeover bid
Operator says fresh offer "continues to substantially undervalue the company" with no extra cash on the table
William Hill has rebuffed a fresh joint-takeover approach from 888 Holdings and The Rank Group after the consortium yesterday offered to give Hills an increased share in the combined firm.
Under the new offer, Hills’ shareholders would hold a 48.8% share of the enlarged entity – an improvement on the 44.6% offered as part of last week’s initial offer.
However William Hill chairman Gareth Davies said the deal continued to undervalue the firm and highlighted that the cash aspect of the deal, at 199p per share, remained the same.
“This revised proposal continues to substantially undervalue the company and the cash element of the proposal has not changed. Therefore, the Board sees no merit in engaging,” Davies said.
“As we have said before, this is highly opportunistic and complex and does not enhance the strategic positioning of William Hill.
“The Board continues to believe we have a strong team to deliver superior value to our shareholders and trading at the start of the second half gives us renewed confidence in our stand-alone strategy,” he added.
The firm said that the revised offer valued the firm at 352p per share, up from its previous offer of 339p, represented just a 12% premium on Hills share price of 314p at close before news of the consortium’s interest was reported.
However, 888 this morning said the fresh proposal valued Hills at 394p and would create “the UK’s largest multi-channel gambling operator” and offer William Hill shareholders “a compelling value creation opportunity”.
The deal, which is estimated result in £100m in cost synergies, would see 888 and Rank shareholders own 23.8% and 27.4% of the enlarged group respectively, with the business headed up by Rank CEO Henry Birch with 888 CEO Itai Freiberger leading the online division.
Speaking this morning, Birch was still hopeful of getting William Hill around the negotiating table.
“With a 48.8% share in the combined business, the largest proportion of the benefits would accrue to William Hill shareholders (as well a significant cash payment), and we hope to engage the William Hill Board in constructive discussions to deliver a deal that makes compelling strategic sense for all three businesses,” Birch said.