25th Jul 2016 08:25
LONDON (Alliance News) - The Rank Group PLC and 888 Holdings PLC on Monday confirmed they are evaluating a possible offer for fellow London-listed gaming company William Hill PLC.
If a deal goes through, William Hill would join in on the wave of merger and acquisition activity which has swept through the UK gambling industry over the past year.
Shares in William Hill were trading up 7.7% at 337.61p on Monday morning following the announcement, the best performer in the FTSE 250. Rank Group shares were up 2.3% at 242.50p and 888 shares up 2.9% at 228.50p.
Both 888 and Rank Group said they see "significant industrial logic" in the combination with William Hill, "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".
The pair have not made a formal approach yet and said there can be no certainty that any such approach will be made.
In a separate statement, William Hill confirmed that it received "a highly preliminary approach" from 888 and Rank Group regarding the potential combination, but that the consortium did not put forward a proposal or set out a position on price, timing, terms, form of consideration, or transaction structure.
"The board of William Hill would listen to and consider any proposal which might be forthcoming from the consortium. However, it is not clear that a combination of William Hill with 888 and Rank will enhance William Hill's strategic positioning or deliver superior value to William Hill's strategy which is focused on increasing the group's diversification by growing its digital and international businesses," William Hill said.
The news confirmed press reports by The Sunday Times and Financial Times that 888 and Rank Group were considering making an offer for William Hill, and also followed the announcement last Thursday of the departure of William Hill Chief Executive James Henderson.
Henderson had been CEO since August 2014 and was with the group for more than three decades. Chairman Gareth Davies, commenting on Henderson's departure, last week suggested the weakness in William Hill's online business may have been the reason for the change at the helm.
Chief Financial Officer Philip Bowcock has stepped in as interim CEO, as the company starts the search for a permanent replacement.
William Hill has been put under pressure in recent years by the huge growth in online gambling, where it has lagged behind, and by consolidation amongst bookmakers, on which it has missed out.
At present, William Hill is the largest bookie in Britain by the number of high street shops, but this will soon change upon the merger of rivals Ladbrokes PLC and Gala Coral Group Ltd.
In addition to Ladbrokes and Coral, Paddy Power and Betfair Group merged last year to create Paddy Power Betfair PLC, the largest bookmaker by market value on the London market, a FTSE 100 constituent, and a major competitor to the traditional bookies in the fast-growing online betting space.
Another large online-focused rival was created by the merger of Bwin.Party Digital Entertainment and smaller firm GVC Holdings PLC. That group will soon join the Main Market in London and will be large enough to ascend to the FTSE 250 index immediately.
William Hill had itself made a bid to acquire 888 in February last year. However, talks between the pair were terminated when they were unable to reach an agreement due to a "significant difference of opinion on value with a key stakeholder", 888 said at the time.
By Karolina Kaminska; [email protected] @KarolinaAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.
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