The board of one of the largest UK gambling operators, William Hill, rejected a £3.1 bn bid from rivaling 888 Holdings and Rank Group this Tuesday. Gareth Davis, the chairman of the company stated that the bid being “highly opportunistic” and underestimating of the company’s real value was one of the reasons why the board reached a decision to decline the offer.
The bid confirmed the rumors surrounding the operators’ plan to merge into a new company and acquire William Hill, following the UK bookmaker’s 16% drop in online profits this year. For this purpose, a new company called BidCo was to be formed, which would take on a debt of £2.2 bn to fund the new acquisition. The new company was to be yet another case in a series of gambling company mergers that followed the tightening of taxation regulations.
Rank and 888 Holdings offered William Hill a 364p per share, consisted of 0.725 shares per every share of the gambling operator and 199p in cash, with a projected synergy growth of share value to 408p per share within the next four years. The deal would have given William Hill shareholders 44.6% of stocks in the newly formed BidCo.
Still, the bid was turned down by the board due to both its low premium value as well as the complexity of the “three-way combination” which would put the company’s shareholders at a triple-risk: an “execution risk, integration risk and risks of materially increased leverage”. The chairman also stated that the company is already experiencing growth in their online division, the largest portions of which come from the US and Australia markets. Will this trend continue we are yet to see, but if you want to support the operator, for the time being, you can visit the William Hill casino.