888, Rank Group Mulling Bid for Bookmaker William Hillby
William Hill says it will listen to any proposal from bidders
Bookmaker’s shares soar 10% in early London trading Monday
The two gaming companies said they see benefits to merging their in-store and online operations. In a separate statement, William Hill said it received a “highly preliminary” approach from 888 and Rank over the weekend regarding a potential combination and would listen to any proposal, yet said it wasn’t clear if a deal would enhance its position in the industry. Rank’s CEO Henry Birch said in January that he was looking for acquisitions.
William Hill shares soared 10 percent in early London trading, giving it a market value of 3 billion pounds ($4 billion). 888 gained as much as 5 percent, while Rank advanced 5.4 percent.
The potential deal is the latest move in a rapidly-consolidating industry and comes during a difficult period for William Hill. The bookmaker ousted Chief Executive Officer James Henderson last week as it struggles to keep pace in the fast-growing world of online betting, and its shares had fallen 21 percent before Monday. A bid could be worth 3 billion pounds, The Sunday Times reported, citing unidentified people. Rank’s CEO Henry Birch said in January that he was looking for acquisitions.
“We did not think William Hill could be a takeover target for any competitor given its size, but we certainly did not expect two players to form a bidding consortium,” Berenberg analyst Roberta Ciaccia said in a note. “The likelihood the deal actually goes through is not high,” particularly as the merger of three big operators is “quite complicated.”
As governments ratchet up the tax burden at a time when companies are competing harder than ever for new customers, oddsmakers are finding the best way to combat the squeeze on profitability is to join forces. At $12.9 billion, the volume of deals announced in 2015 was about double that of 2014 and the highest since 2005, according to data compiled by Bloomberg. Recent deals include Paddy Power Plc’s 2.9 billion-pound takeover of Betfair Group Plc, and the merger of U.K. betting-shop leaders Ladbrokes Plc and Coral Group.
Maidenhead, U.K.-based Rank and Gibraltar-based 888 need to formally announce their intention to make an offer or walk away by 5 p.m. in London Aug. 21, under U.K. takeover rules.