Rank, 888 Drop William Hill Takeover Attempt
Rank Group PLC and 888 Holdings PLC have abandoned their joint effort to acquire the UK’s largest bookmaker, William Hill, after William Hill’s execs continued to give a cold shoulder to a sweetened buyout offer put together by the two smaller online-focused firms.
Earlier this week, William Hill’s board rejected an 888/Rank offer that equaled about 394 pence/share for William Hill’s outstanding shares. That total offer was worth about £3.425 billion. This second rejection from Bill Hill’s honchos came only a few days after they dissed the first 888/Rank bid, which came in at 364 pence (about £3.2 billion). The second offer from 888 and Rank Group also restructured the stock-swap portion of the offer, removing the conditional creation of a new entity (called BidCo) that was proposed as part of the takeover mechanism.
There’s no evidence that William Hill seriously considered the second offer, just as it handily dismissed the first. The public appearance the quick, twin dismissals presented was that of a company (William Hill) that was simply unwilling to seriously entertain offers from smaller firms, quite possibly and particularly including one (888) that William Hill itself had tried to acquire back in 2014.
Thus the status quo remains intact, with William Hill remaining the UK’s largest book, but with less-than-stellar recent financials and questionable penetration in the online sphere, the industry’s fastest growing segment.
Given the possible stock-price impact of the abandoned acquisition, 888 and Rank issued a joint investor and regulatory advisory disclosing the abandoned effort. The brief statement took a parting shot at William Hill’s perceived stodginess as well, and reads in its entirety as follows:
STATEMENT OF INTENTION NOT TO MAKE AN OFFER
888 Holdings Plc (“888”) and The Rank Group Plc (“Rank”) announce that they do not intend to make an offer for William Hill plc (“William Hill”) and are withdrawing their proposal for a possible combination of the three companies.
On 24 July 2016, 888 and Rank confirmed that they were evaluating a possible combination (the “Proposed Transaction”) of 888, Rank and William Hill (the “Enlarged Group”). 888 and Rank subsequently submitted non-binding proposals (the “Proposals”) to William Hill’s board on 8 August 2016 and 14 August 2016. Based on the closing price of the 888 shares on 5 August 2016 (the last business day prior to the submission of the first Proposal), the Proposals valued William Hill shares at 364 pence and 394 pence respectively before taking into consideration the expected benefits of cost synergies, revenue synergies or the potential re-rating of the Enlarged Group.
The Proposed Transaction would have created a transformational force in the global betting and gaming industry and the UK’s largest multi-channel gambling operator by revenue and profit and was expected to have unlocked substantial cost and revenue synergies.
Notwithstanding 888 and Rank’s belief in the inherent value of their Proposals, it has not been possible to meaningfully engage with the board of William Hill. 888 and Rank respect the William Hill board’s position and, as such, after careful consideration each now confirms that they have withdrawn their interest and that they do not intend to make an offer for William Hill.
Rank and 888 remain committed to enhancing returns to their shareholders through their respective focused strategic plans.
Itai Frieberger (888 CEO) said:
“We are disappointed that the board of William Hill did not share our vision of the combined businesses. We believe that there was compelling industrial logic for the combination of these highly complementary businesses, which in our view would have brought scale, diversification, and strong revenue and cost synergies, from which all shareholders would have benefitted.”
Henry Birch (Rank CEO) added:
“We strongly believe that the transaction would have created significant value for all three sets of shareholders. We and 888 are grateful for the shareholder support we have received throughout this process.”
William Hill offered no official comment in connection with the dropped acquisition.
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