William Hill rejects the joint takeover proposed by 888 and Rank Group, labeling it "opportunistic". Earlier last week, the board of William Hill (considered as one of the biggest bookmakers in Britain) has unanimously rejected the £3.16 billion ($4.2 bn) takeover bid from online operator 888 Holdings and casino giant Rank Group.
The offer, in cash and shares, was labeled "highly opportunistic" by the chairman of William Hill Gareth Davis, who explained that the offer did not reflect the true value of the company, "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."
What would happen if they agreed
The deal would potentially create the UK's third-biggest online betting group with revenues reaching up to £2.7bn. The shares of William Hill have risen 22% to 334p since 888 Holdings said last July that it was considering a joint bid with Rank Group. The bid means 888 will take over Rank, with the newly formed company then buying William Hill.
The outcome would involve some £2.2bn in debt, chairman Davis pointed out.
The offer of 364p per share to William Hill shareholders consists of 199p in cash and 0.725% per share in the new company, BidCo. However, 888 and Rank argue that its business plan will increase the value of the company to up to 408p per share - or £3.6bn. Both 888 and Rank stated that they see a "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."
888 co-founder's son irked by William Hill's rejection
On the other side, the rejection was not taken too well by Eyal Shaked, the son of 888 Holdings co-founder Avi Shaked, who stated in his Twitter feed that the rejection will result in William Hill's downfall.
Even though Eyal does not own any of his family's stake in 888 Holdings, his family controls about 48% of 888; therefore, its support for the bid on William Hill is crucial. It is rumored that it was the Shaked family who rejected William Hill's takeover bid of 888 back in February 2015. William Hill put up a £700m offer.