888 Holdings casino operator Rank Group are in discussions to come together and make a merger bid on British bookmaker William Hill.
If successful, the deal would combine a leading online gambling player with Britain’s top casino and bingo hall operator and the country’s biggest high street bookmaker.
“The consortium sees significant industrial logic in the combination, through consolidation of their complementary online and land-based operations, delivery of substantial revenue and cost synergies and from the anticipated benefits of economies of scale,” 888 and Rank said in a joint press statement.
The companies said they have not formally approached William Hill.
“Accordingly, there can be no certainty that any transaction will ultimately take place, nor as to the terms on which any such transaction might be constituted,” the release said.
However, William Hill later announced it has received “a highly preliminary approach from 888 and Rank,” regarding a potential three-way merger.
According to Britain’s Sunday Times Rank has been in talks with 888 about creating a ?2 billion (US$2.6 billion) gambling group consortium with the possible aim of launching a ?3 billion bid for William Hill.
William Hill actually attempted to buy 888 Holdings last year, making a ?720 million bid, but the deal fell through after the company could not agree on a price with major 888 shareholder, Israel’s Avi Shaked.
Since then, the mergers of competitors Ladbrokes and Gala Coral have and Paddy Power and Betfair have severely hurt William Hill’s place in the market. Meanwhile, 888 Holdings made a failed attempt to buy bwin-party.
Last month, William Hill’s board fired CEO James Henderson due to poor online performance. Shares in William Hill have declined 31 percent in the last 12 months hitting a three-year low in June and valuing its equity at about ?2.75 billion.
William Hill Chief Financial Officer Philip Bowcock has been named interim CEO until a permanent replacement is found.
William Hill issued a statement saying it will ‘listen to and consider’ any formal takeover offer put forward by the Rank Group and 888 Holdings consortium. However, the bookmaker’s board also said it was unclear whether a consortium bid could “deliver superior value” as the company focuses on a strategy of “diversification by growing its digital and international businesses.”
“It is not clear that a combination of William Hill with 888 and Rank will enhance William Hill’s strategic positioning or deliver superior value to William Hill’s strategy,” the company said in a press statement.
Shortly after the news of the possible merger broke, William Hill stock saw an 11 percent bump in Britain.
