William Hill Turns Down £3.16 Billion Takeover Bid
Leading UK bookmaker, William Hill has rejected a £3.16 billion takeover bid from 888 and Rank Group. The board of William Hill described the offer as a “substantial risk” for shareholders and an undervaluation of the company.
The takeover proposal would see 888 and Rank Group combining to form a joint entity to be known as BidCo. The new entity would then purchase William Hill for cash and shares in the newly formed company. This would involve £2.2 billion of debt.
“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,” said chairman of William Hill, Gareth Davis.
According to William Hill, the bid represented 364 pence per William Hill share taken from the closing price on August 5 of 888 and Rank. William Hill stated that this represented a mere 11 percent premium on William Hill’s share price on August 8 of 327 pence.
While William Hill has had two years of poor performance, resulting in the removal of their chief executive James Henderson after two years, the company is reporting an upturn in results. This month they reported a one percent revenue increase for H1 with 12 percent growth in its Australian business.
“Having reviewed the proposal with its financial advisers, Citi and Barclays, the board of William Hill has unanimously rejected the proposal as it substantially undervalues William Hill,” William Hill commented on the offer.
“In addition, the board of William Hill does not believe that a combination of William Hill with 888 and Rank will enhance William Hill’s strategic positioning or deliver superior value for shareholders compared against William Hill’s strategy, which is focused on increasing the group’s diversification by growing its digital and international businesses.”
March 23, 2017