William Hill receives merger offering from two rival gambling companies
UK betting firm William Hill has received a merger offer from rival gambling companies 888 and Rank Group as consolidation in the sector continues.
William Hill said it would “listen to and consider” any proposal.
However, it was not clear that a combination of William Hill, 888 and Rank would “deliver superior value”, the company said.
Online operator 888 and Rank, the UK’s biggest casino chain, said they saw “significant industrial logic in the combination”.
The move comes just days after William Hill’s chief executive, James Henderson, was ousted from the bookmaker following a series of profit warnings.
Mr Henderson, who took the helm in August 2014, had failed to resolve problems in the firm’s struggling online business.
In May, its most recent trading update, the firm said net revenues had fallen 11% in its online division in the 17 weeks to 26 April. William Hill’s shares have dropped 21% since the start of the year, valuing the former FTSE 100 firm at £2.7bn.
Rank and 888 said they had not yet made a formal approach to William Hill’s board and added there was “no certainty that any transaction will ultimately take place”.
Rank’s chief executive, Henry Birch, is a former head of William Hill’s online division.
Under UK takeover rules, the firms have until 21 August to either make a firm offer or walk away.
The potential bid comes after William Hill tried to acquire 888 last year in a £720m offer, but the deal collapsed after 888 rejected the offer as too low.
Since then, rival betting firms Ladbrokes and Gala Coral have agreed a £2.3bn merger which received preliminary regulator approval in May.
The combined group would make it bigger than William Hill, currently the largest UK bookmaker based on number of shops.
Irish bookmaker Paddy Power and online operator Betfair also agreed to join forces last September.
Rupal Karia, managing director of retail and hospitality, UK and Ireland at Fujitsu: “The possible merger of William Hill with 888 and Rank makes complete sense from a diversification and digitalisation standpoint. As both organisations are well-established in their respective channels, a merger could open up both parties to a new lease of customer. Such a deal would benefit both groups, as it would give William Hill the online presence it has not yet attained, and for 888 and Rank, the bricks and mortar stores would provide a new footfall in customers.
“Moving to either a bricks and mortar or online service can be a challenge for many businesses today. Because of this, it is important that when companies are looking at a merger, they target businesses that complement and enhance their offering. This proposed William Hill merger would help to create such a balance by consolidating that online and off-line expertise, and providing efficient services that cater for all customers.”