Shares spike as consortium bets on William Hill offer
Online gamer 888 Holdings and casino owner The Rank Group said they're considering a joint takeover offer for UK bookmaker William Hill Plc, proving that the recent wave of industry consolidation isn't over yet.
The two gaming companies said they see benefits to merging their in-store and online operations.
In a separate statement, William Hill said it received a "highly preliminary" approach from 888 and Rank over the weekend regarding a potential combination.
It said it would listen to any proposal, yet said it wasn't clear if a deal would enhance its position in the industry.
Rank's ceo, Henry Birch, said in January that he was looking for acquisitions.
William Hill shares soared 10pc in early London trading, giving it a market value of £3bn (€3.5bn). Shares in 888 gained as much as 5pc, while Rank advanced 5.4pc.
The potential deal is the latest move in a rapidly-consolidating industry and comes during a difficult period for William Hill. The bookmaker ousted chief executive officer James Henderson last week as it struggles to keep pace in the fast-growing world of online betting, and its shares had fallen 21pc before yesterday.
A bid could be worth £3bn, 'The Sunday Times' reported, citing unidentified people.
"We did not think William Hill could be a takeover target for any competitor given its size, but we certainly did not expect two players to form a bidding consortium," Berenberg analyst Roberta Ciaccia said in a note.
"The likelihood the deal actually goes through is not high," particularly as the merger of three big operators is "quite complicated."
As governments ratchet up the tax burden at a time when companies are competing harder than ever for new customers, bookies are joining forces to achieve scale.
Recent deals include Paddy Power's £2.9bn takeover of Betfair Group, and the merger of UK betting-shop leaders Ladbrokes Plc and Coral Group.
Rank and 888 must formally announce its intention to make an offer or walk away by 5pm in London on August 21, under UK takeover rules. (Bloomberg)