William Hill Remains Cool to 888 Holdings / Rank Takeover Attempt

The United Kingdom’s largest bookmaker, William Hill, continues to keep its official distance from a joint offer for the UK betting giant that was promised by 888 Holdings Plc. and Rank Group Plc. last week.  William Hill, though hardly thought of as a “distressed” company, has nonetheless entered into choppy waters.  The company first posted a reduced-earnings warning in late July, then immediately following that with the announcement of the forced resignation of CEO James Henderson later the same day.

The quick one-two punch didn’t exactly send Bill Hill’s share price reeling.  Instead, the stock climbed several percentage points higher, since the poor earnings report was already expected and the ouster of Henderson was viewed as a major plus by market investors.  Henderson’s stodgy stewardship over the past couple of years, especially in the online sector, was widely viewed as a primary contributor to Hill’s weak performance.

And when 888 and Rank announced their tentative plans for a joint acquisition on July 25th, William Hill’s share price climbed higher still, essentially wiping out the long slide in the company’s share price this past spring and early summer.  Despite that, it does not appear that William Hill views the 888/Rank offer — if it indeed is firmed up — as welcome news.

According to an unidentified WH spokesman, speaking directly to a couple of European financial news outlets, “The Board of William Hill would listen to and consider any proposal which might be forthcoming from the consortium.” The representative confirmed that 888 and Rank had indeed made a contact with William Hill about a possible acquisition.  “However,” continued the spokesman, “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 which is focused on increasing the group’s diversification by growing its digital and international businesses.”

One of the interesting things about this takeover attempt, valued in total at about £3.1b, is that it’s a classic tale of the shoe being on the other foot.  Just a year or so ago, it was William Hill that sought to scoop up 888 Holdings, but that would-be deal fell apart when Hill’s £720m bid was deemed insufficient by the Shaked brothers, Avi and Aaron, who together own about half of the company.  (Rank Group, in contrast, would be a natural compliment to 888s online presence, since Rank is a land-based gambling power, known for its Grosevenor casino chain and other gambling properties.)

What the episode of Bill Hill trying to acquire 888 might have triggered, however, was an overall increase in market aggression by 888 itself amid the consolidation-happy online gambling sector.  Having successfully fended off William Hill’s advances, 888 then aggressively sought to take over the foundering bwin.party operation, though that went to rival GVC Holdings after a protracted, heated bidding war.  And then there was the Gala Coral-Ladbrokes merger, which William Hill tried hard to quash — for a second time, no less — but which has moved forward.

The UK gambling market has been an “eat or be eaten” tableau for a couple of years now, and this latest attempt by 888 and Rank to swallow the larger Hills gambling empire is a sure sign that the consolidation is ongoing.  The joint takeover offer, probably a hostile takeover attempt in the technical sense, may never come to fruition.  Yet William Hill and 88 continue dancing around each other, and it appears that sooner or later, something’s got to give.