William Hill lukewarm over merger with 888 and Rank

William Hill lukewarm over merger with 888 and Rank

Monday, July 25, 2016 Posted by Andy McCarron
The betting giant doesn't see much advantage in joining the gaming and online operators

A busy week for William Hill has seen the bookmaker receive a ‘highly preliminary approach’ from 888 Holdings and Rank Group with the intention of creating a super operator with extensive interest in land-based betting shops, casinos and bingo clubs, as well as extensive online expertise.

However William Hill, which last week unexpectedly lost its CEO after James Henderson abruptly stood down, has not been overly welcoming to the approach and attempted to pour cold water on the speculation with a statement to the stockmarket.

It said: “William Hill PLC confirms that over the weekend it received a highly preliminary approach from 888 and Rank regarding a potential combination of the three companies. The Consortium did not put forward a proposal or set out a position on price, timing, terms, form of consideration or transaction structure.

“The Board of William Hill would listen to and consider any proposal which might be forthcoming from the Consortium. However, it is not clear that a combination of William Hill with 888 and Rank will enhance William Hill's strategic positioning or deliver superior value to William Hill's strategy which is focused on increasing the Group's diversification by growing its digital and international businesses.”

The statement also made it clear that the announcement was done without the approval of the consortium, suggesting that there has not been too much encouragement from the bookmaker to its suitors.

For their part 888 and Rank were forced to come clean after news of their consortium’s plans were revealed in the Sunday Times.

In a joint statement, the companies said: “The Consortium sees significant industrial logic in the combination, through consolidation of their complementary online and land-based operations, delivery of substantial revenue and cost synergies and from the anticipated benefits of economies of scale which will accrue to all shareholders.”

Despite William Hill’s initial coolness, there are several touchpoints that make a potential deal compelling. Last year the bookmaker tried to instigate a £700m takeover of 888, so it recognises the synergies between the two companies, even if it wasn’t willing to move on the price. Meanwhile Rank CEO Henry Birch was formerly CEO at William Hill Online and has already been touted as a potential successor to James Henderson.

Whether William Hill is interested in being part of a supergroup including the Rank operations might be questionable, given that Gala Coral has spent the last three years trying to decouple its betting business from the Gala Bingo and Gala Casino operations. The lack of obvious synergies enjoyed by the Gala Coral Group and the ultimate breakdown of that model would understandably make William Hill cautious.

Totally Gaming Says: The Consortium may have been spending weeks putting together an offer, but it’s timing feels a little opportunistic given William Hill’s sudden gap in the CEO position and next week’s interim results presumably part of the reason for Henderson’s departure. The Consortium now has until 21 August to make a formal offer and make its vision clear to William Hill and its shareholders.

Should William Hill jump in with 888 and Rank?

888 Holdings and Rank Group have formed a consortium with an eye on merging with William Hill to create a huge gambling operator. But does such a deal make sense?

No - The merger of three operators like this would just be too complicated
58% (7 votes)
Maybe - There is definite potential there, but hard to say without more detail
25% (3 votes)
Yes - It's a great deal for William Hill to regain some much needed vision
17% (2 votes)
Total votes: 12
Poll availability: 
Wednesday, January 25, 2017 to Tuesday, January 31, 2017
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