888 Chief: Leak Mainly to Blame for William Hill Bid Failureby
Disclosure ‘didn’t allow conversation behind closed doors’
888 shares advance as revenue gains continue in third quarter
A press leak was one of the main reasons that 888 Holdings Plc and Rank Group Plc failed in their 3.1 billion-pound ($4.1 billion) pursuit of U.K. bookmaker William Hill Plc, according to 888 Chief Executive Officer Itai Frieberger.
The suitors announced their interest in buying William Hill on July 24, only hours after their plans were reported by the Sunday Times. The disclosure started the regulatory clock ticking, giving them less than a month to make a formal offer or walk away. After an increased proposal failed to gain the ear of William Hill’s board, they gave up on their plans and are now barred from making a hostile bid for at least six months unless someone else does.
“The leak didn’t allow us to have a conversation behind closed doors,” Frieberger said by phone Wednesday after 888 reported higher first-half earnings and revenue. “That’s one of the root causes of why we couldn’t progress it. Before we could make a call to William Hill, it was all over the press. That is very unfortunate.”
The gaming industry has become a stamping ground for deals as companies seek greater scale amid a rush to capitalize on the booming online wagering market. The combination of 888, Rank and William Hill would have created Britain’s largest gaming company across all platforms, though stumbled after the bookmaker rejected the terms of a cash-and-share proposal. Still, 888 has room to grow, Frieberger said.
“We don’t see M&A as a critical path in the way 888 moves forward,” he said. “The only reason we will do a deal is to create additional shareholder value.”
888 shares rose as much as 6.9 percent in London after the company said a strong first-half performance continued into the third quarter. Average daily revenue per customer rose 22 percent on a like-for-like basis since the start of the third quarter to Aug. 27.
“We suspect that the combination of impressive momentum, market-leading technology and ambitious management means it may yet participate in the ongoing industry consolidation,” Richard Stuber, an analyst at Numis, said in a note.
888’s biggest strength is in online casinos, where first-half revenue rose 31 percent to $137.4 million. The smaller sports betting business boosted sales 63 percent to $25 million, helped by the Euro 2016 soccer tournament.
The tournament also boosted results at bookmaker Gala Coral, which on Wednesday reported a 10 percent increase in third-quarter revenue in what may be its last such announcement before being acquired by rival Ladbrokes Plc.
888’s Frieberger said he expects the U.S. to become an increasingly important market for the company as laws on gaming are loosened.
“It could be very big, the only question is time,” he said. “Once it’s going to happen, 888 will be one of biggest players in the U.S. online gaming market.”