William Hill has turned down a .2 billion bid from 888 Holdings and the Rank Group to acquire the U.K. bookmaker.
The bid offered 364 pence a share, with 45 percent of that being shares in a new company formed to make the acquisition, William Hill said in a press statement. The stock bid was 16 percent lower than William Hill’s stock price before news of the acquisition leaked, the statement said.
The bid was essentially 1.7 billion pounds in cash plus 45 percent of the newly created company.
“This conditional proposal substantially undervalues William Hill, is highly opportunistic and does not reflect the inherent value of the business,” William Hill Chairman Gareth Davis said in the statement. The “highly complicated” proposal involves “substantial risk” for shareholders, as the merged company would be saddled with 2.2 billion pounds of debt to fund the cash part of the deal, it said.
William Hill’s statement on the rejected bid, however, did not say the idea of the merger was unacceptable, leaving open the possibility that it would consider a higher bid. 888 Holdings and the Rank Group are expected to make another offer, according to analysts, but it is unclear if the two companies have the cash needed to close a deal.
A merger, however, would keep pace with other mergers in the U.K. betting industry such as the merger of competitors Ladbrokes Plc and Coral, which will make those companies Britain’s biggest bookmaker.
888 and Rank have said that a merger would consolidate their online and store-based operations and would deliver “substantial revenue and cost synergies.”
According to reports, the bid from 888 and Rank was 199 pence a share in cash and 0.725 shares in the bidding company, the bookmaker said. William Hill investors would own 44.6 percent of the combined entity, which would have annual revenue of about 2.8 billion pounds.
