888 Holdings, Rank Group Talk Merger, Eye William Hill Pickup
International gaming giants 888 Holdings and Rank Group have confirmed talks of a possible merger with a possible jointly-purchased giant in their sites: the suddenly foundering UK market leader William Hill.
Spokesmen for 888 and Rank issued a brief statement confirming the ongoing discussions. The announcement, made earlier today, was distributed by e-mail to select UK financial-news outlets.
According to the joint confirmation, “The consortium [referring to the combination of 888 and Rank] 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 which will accrue to all shareholders.”
The possible offer for William Hill comes amid a tumultuous week or two for the venerable firm, following last week’s forced ouster of CEO James Henderson, following a lowered profit warning issued earlier this year and general market consensus that William Hill has lagged well behind its primary competitors in securing its online future.
William Hill is expected to issue a statement on Monday downplaying the potential acquisition, which could be described, if executed, as a hostile takeover attempt. It’s an interesting twist on previous deal talks between William Hill and 888 back in 2014 and early 2015, in which it was William Hill considering buying 888 in a deal worth an estimated £720 million.
That deal fell apart, and a reprieved 888 subsequently failed in a heated bidding battle to acquire beleaguered rival bwin.party, which went instead to GVC Holdings. Nonetheless, in the two years since, which roughly equals the timeframe of Henderson’s stint as CEO at Hills, that company has foundered, dropping more than 30% of its share value.
888, meanwhile, has surged by roughly the same percentage, while Rank Group, with a well-known presence in both the land-based and online UK markets, including owning numerous Grosvenor casino properties, has been relatively stable. Should Rank and 888 merge together to produce a larger firm, separate from the potential William Hill acquisition, the combined firm would have a market valuation of about £1.7 billion. That’s still less than the £3 billion valuation figure at present for Hills, suggesting a leveraged offer is in the works, but William Hill’s weak numbers and well-established UK presence still leave the company as an inviting target.
UK financial-market regulations require that if a firm bid is made by the joint 888-Rank consortium, a formal, finalized bid must be made by August 21st. More details on the potential takeover and its ripple effects upon the rapidly changing European gambling landscape are expected in the near future.