In August, 888 Holdings and The Rank Group were unable to convince William Hill to join forces with them to form a new mega-gaming firm. Now, 888’s Chief Executive is insistent that his company and Rank are not about to merge sans Will Hill.
The week after the second of two proposals from 888 and Rank were rejected by William Hill’s Board of Directors, Rank CEO Henry Birch told The Telegraph that his company is still very much interested in growing via a merger or acquisition, saying, “We have shown that we’ve got the confidence and creativity to participate, and the ambition.”
“But we won’t do so at all costs,” he added.
He wouldn’t say anything when asked about possibly just making it a duet with 888 instead of a trio, but he did note, “I can see myself having lunch with Itai [Frieberger, 888’s CEO].
That, of course, fueled rumors that 888 and Rank might want to merge with each other without William Hill or any other third partner. Frieberger, though, said last week, “888 will continue to grow its business with or without M&A [mergers and acquisitions]. Right now the Rank standalone [deal] is not something that we’d like to do.”
The attempt by 888 and Rank to buy William Hill was last month’s big news on the gaming business front. It began publicly August 9th, when William Hill, which itself tried to acquire 888 last year, confirmed that it had both received and rejected an acquisition proposal from the two companies. In the proposal, 888 and Rank would first merge to create a new company, BidCo, which would be the company that would actually make the purchase. BidCo would offer 199 pence per William Hill Share plus .725 BidCo shares per William Hill share. When taking into consideration 888 and Rank’s stock prices on the last day of trading before the offer, the total value of the proposal was 364 pence per share, or £3.164 billion.
After William Hill’s Board turned that down, 888 and Rank came back a week later with a second offer, valued at 394 pence per share, or £3.425 billion. This one changed the stock piece, eliminating the BidCo plan and simply offering .860 shares of 888 stock for each share of William Hill. The 199 pence per share in cash remained in place. None of the three companies would have owned a majority of the merged firm, with William Hill shareholders controlling 48.8 percent of the company, 888 shareholders getting 23.8 percent, and Rank shareholders owning 27.4 percent.
Upon turning down the second offer, William Hill’s Board wrote:
The Board of William Hill continues to believe that the Revised Proposal is highly opportunistic and does not reflect the inherent value of the Group. Under the Revised Proposal, William Hill shareholders continue to be offered a substantial proportion of their consideration in highly leveraged BidCo shares and so it is directly relevant that the Board of William Hill continues to believe that a combination of William Hill with 888 and Rank will not enhance William Hill’s strategic positioning or deliver superior value for shareholders compared against William Hill’s strategy, which is focused on increasing the Group’s diversification by growing its digital and international businesses.
