BUSINESS

Rank Group, 888 Holdings eyeing merger and joint bid to acquire William Hill

TAGs: 888 Holdings, Rank Group, William Hill

rank-888-william-hill-gambling-consolidationThe pace of UK gambling market consolidation sped up over the weekend on reports that casino operator Rank Group and online gambling business 888 Holdings were teaming up on a joint bid to acquire bookmaker William Hill.

As first reported by the Sunday Times, Rank and 888 are in “advanced talks” regarding a merger that would create a £2b firm. Assuming that deal gets done, the pair would then make a £3b play to acquire Hills, creating a truly full spectrum gambling operator.

Rank and 888 subsequently issued a joint statement saying they saw “significant industrial logic” in acquiring Hills, a move they believe will result in “substantial revenue and cost synergies.” While no formal approach has yet been made to Hills, UK takeover regulations give Rank and 888 until Aug. 21 to propose specific terms of a deal.

Rank operates over 50 Grosvenor casinos and nearly 100 Mecca Bingo clubs, as well as a young but thriving online division. 888 is an online-only operation with a particularly strong poker vertical. Hills has the UK’s second largest (if currently underperforming) online division as well as the UK’s largest retail betting presence that generates over half of its overall revenue.

Hills has yet to comment on the reports, although a source told The Telegraph that Hills believed there was “significant execution risk” in managing a three-way deal and that Hills remained confident in its own expansion plans. However, speculation has already started that the possibility of a merger may have contributed to last week’s abrupt resignation of Hills CEO James Henderson.

888 and Hills have been down this road before, as Hills made an attempt to acquire its online rival in early 2015, but these talks fell apart after 888 co-founder Avi Shaked felt the offer was too low. 888 responded by making a bid to acquire Bwin.party digital entertainment, only to be pipped at the post by GVC Holdings.

Synergy-seeking operators began rushing to the merger altar following the UK government’s requirement for all UK-facing online operators to hold UK Gambling Commission licenses and pay 15% tax on online revenue derived from UK punters. Operators with a UK retail presence also saw increased taxes on their shops’ profitable fixed-odds betting terminals while European Union markets hit online operators with new value added taxes.

The biggest consolidation moves to date include the marriage of Ladbrokes and Gala Coral Group, which in May was granted conditional approval by the UK Competition and Markets Authority, and the merger of Paddy Power and Betfair, which began trading as Paddy Power Betfair in February.

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