$4 Billion Bid to Consolidate U.K. Betting Industry Failsby
888, Rank say William Hill refused to ‘meaningfully engage’
Two sides had disagreed on value of U.K.’s biggest bookmaker
Two U.K. betting companies abandoned their pursuit of William Hill Plc, the country’s biggest bookmaker, after it rejected an increased 3.1 billion-pound ($4 billion) bid that would have accelerated consolidation of the British gambling industry.
888 Holdings Plc and Rank Group Plc said they made the decision after failing to “meaningfully engage” with the board of William Hill. Under U.K. takeover rules, they can’t make a hostile bid for at least six months unless someone else does.
“We are disappointed that the board of William Hill did not share our vision of the combined businesses,” 888 Chief Executive Officer Itai Frieberger said in a statement Thursday. “We believe that there was compelling industrial logic for the combination of these highly complementary businesses.”
A deal would have spurred a round of betting-industry consolidation that has included the combination of competitors Ladbrokes and Gala Coral, as well as Paddy Power and Betfair.
William Hill, known for its chain of betting stores on U.K. shopping streets, said it would focus on bolstering its online business, which has struggled to compete with rivals like 888 and Betfair. The company also wants to expand its international operations.
“We will continue to focus our efforts on our strategy to deliver value for shareholders,” William Hill Chairman Gareth Davis said in a statement. “The team has a clear plan to grow by diversifying digitally and internationally.”
William Hill has been hampered by a leadership void as it fended off the takeover approach. Former CEO James Henderson left in July after failing to turn around the online division. As it seeks a new chief, the company has been led by Davis and interim CEO Philip Bowcock.
William Hill shares fell 1.5 percent to 303.1 pence at the close of trading in London.
Analysts at Berenberg said it was unlikely that other suitors would emerge for William Hill. The company is too big for other U.K. betting operators to absorb easily, they said, and unattractive to private equity because it would offer insufficient returns.
Among the areas of disagreement between the two sides was the value of the suitors’ proposal, which William Hill said was worth 352 pence a share. Rank and 888 gave a valuation of 394 pence.
Casino operator Rank and online gambling specialist 888 said they “remain committed to enhancing returns to their shareholders through their respective focused strategic plans.”
Rank closed down 1 percent at 221.6 pence, while 888 gained 2.4 percent to 205 pence.
The bidders were advised by Morgan Stanley. Citigroup and Barclays acted for William Hill.