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Published: Wed, August 10, 2016
Economy | By Melissa Porter

Rank, 888 make $4.68 bln bid for William Hill: FT


William Hill Plc rose on a report that Rank Group Plc and 888 Holdings Plc submitted a 3.6 billion-pound ($4.7 billion) takeover bid for the United Kingdom bookmaker.

The Proposal represents an estimated value of 364 pence per William Hill share (based on the closing price of 888 and Rank on 5 August) with 45% of the proposed consideration in the form of BidCo shares.

But William Hill's board "unanimously rejected" the offer, saying it posed "substantial risk" for shareholders. 888 fell 1.9 percent to 219.25 pence, while Rank eased 0.9 percent to 211 pence.

William Hill said the proposal envisages an inter-conditional all-share merger of 888 and Rank, with 888 acting as the acquiring entity, to create BidCo, which would contemporaneously offer to acquire William Hill for cash and newly issued shares in BidCo. Simon French, an analyst at Cenkos Securities, last month said that "any successful offer for William Hill would have to be pitched at well over 400p-per-share".

No-one was immediately available from Rank Group or 888 to comment on the report when contacted by the Wall Street Journal.

"It is a very complex three-way combination at a low premium involving substantial risk for William Hill shareholders: execution risk, integration risk and risks of materially increased leverage". However, it cautioned that it wasn't clear whether a deal would enhance William Hill's strategic positioning or deliver superior value to William Hill's strategy.

John Colley, a Professor of Practice at Warwick Business School said the bid "looks particularly opportunist as William Hill have lost their chief executive James Henderson after two years of disappointing performance with the shares at a lowly 336p compared with the 364p offer".

Shares in William Hill, which reported a 16 percent drop in first-half operating profit last week, were trading up 0.5 percent at 329.5 pence at 1528 GMT. A spokesman for 888 said: "We thought they were a bit rude about us but we have nothing to add".

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