On Tuesday, UK media reported that Rank and 888 had submitted a joint £3.16b bid to acquire Hills, following rumors that surfaced late last month. Under the UK market’s takeover regulations, the companies had until Aug. 21 to formally make their intentions known.
Later on Tuesday, Hills chairman Gareth Davis issued a statement saying the company’s board of directors had unanimously rejected the 364p-per-share bid as too low. The board’s opinion was that Rank-888’s plans to achieve synergies that would boost the deal value to 408p-per-share would take too long to achieve.
Davis also said the deal – which would involve the companies taking on £2.2b in debt – was “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.”
Davis said the ”highly opportunistic” bid, which represents a 16% premium on Hills’ current share price, “substantially undervalues” the company. The offer to Hills’ shareholders consisted of 199p in cash and 0.725% per share in the new entity, which would have given Hills’ shareholders a nearly 45% stake in the enlarged betting behemoth.
The deal was viewed in some circles as symbiotic, combining Hills’ dominant retail bookmaking presence with Rank’s casino and bingo operations and 888’s thriving online presence. Hills’ online division has struggled of late, while 888 has been firing on all cylinders. But Davis insisted that Hills had a “strong team” working on reviving its sputtering online business and therefore he strongly advised that shareholders “take no action.”
The UK market is currently awash in consolidation fever, having already witnessed Paddy Power hook up with Betfair and GVC acquire Bwin.party, while Ladbrokes and Gala Coral Group expect to complete their merger later this year.