9th Aug 2016 14:59
LONDON (Alliance News) - William Hill PLC on Tuesday confirmed that it has received a takeover offer from fellow gaming companies 888 Holdings PLC and The Rank Group PLC, but said it has rejected the offer.
Earlier on Tuesday, the Financial Times reported that 888 and Rank Group had submitted an offer of GBP3.6 billion for William Hill.
Later in the day, William Hill issued a statement confirming that it had received a proposal under which 888 would act as the acquiring entity to create BidCo, which would offer to buy William Hill for 199 pence in cash and 0.725 newly issued BidCo shares per William Hill share. This would result in William Hill shareholders owning 45% of the combined group.
The proposal represents an estimated value of 364p per William Hill share, with 45% of the proposed consideration in the form of BidCo shares.
This represents a premium of 16% to William Hill's share price of 314p on July 22, which was the last day prior to 888 and Rank Group first making an approach, and a premium of 11% to William Hill's share price of 327p on Monday.
Shares in William Hill were trading up 1.9% at 333.60p on Tuesday afternoon.
William Hill said that, having reviewed the proposal with its financial advisers Citi and Barclays, it has decided to reject the offer on the grounds that it "undervalues" the company.
It added that it does not believe that a combination of William Hill with 888 and Rank Group would enhance its strategic positioning or deliver superior value for shareholders compared against its independent strategy, "which is focused on increasing the group's diversification by growing its digital and international businesses".
"This conditional proposal substantially undervalues William Hill, is highly opportunistic and does not reflect the inherent value of the business. 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. The group has a strong team to deliver against our strategy to grow our digital and international businesses so we strongly advise that shareholders take no action," Chairman Gareth Davis said.
Shares in 888 were trading down 2.1% at 218.75p on Tuesday afternoon, while Rank Group shares were down 0.2% at 212.50p.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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