William Hill 'will listen' to bid as rivals chase £5 billion mergerComments Off on William Hill 'will listen' to bid as rivals chase £5 billion merger
Shares in William Hill and its would-be bidders soared on Monday on hopes of a stunning £5 billion deal in the rapidly shrinking gambling sector.
Hill, which ousted its chief executive last week, said it would “listen to and consider any proposal” which might be made.
However, it added it was not clear that a deal with 888 and Rank would “enhance William Hill’s strategic positioning or deliver superior value”.
Analysts said that while the deal had industrial logic, it could be difficult to deliver given that two companies, valued at just under £1 billion each, were targeting one company valued at £3 billion.
Hill’s shares jumped 9%, or 28p, to 341.6p, while those of 888 Holdings and Rank, who are working on a joint bid, gained 3%, or 6.5p, to 228.5p, and 2%, or 4.3p, to 241.4p.
The Takeover Panel has given 888 and Rank until August 21 to come up with a formal bid or walk away.
Sources said that this could put pressure on them because their own talks were at a very early stage and neither the structure nor price of a bid had been finalised.
But most analysts expect a full three-way merger, bringing together William Hill’s sportsbook and betting shops, 888’s superior online technology and marketing and Rank’s physical and virtual casino and Mecca bingo business.
888 has been a bid target of Hill previously, has also seen off two bids from Ladbrokes and failed in an attempt to buy Bwin.party.
But now that Betfair and Paddy Power have merged in a £5 billion deal and Ladbrokes and Coral are near completing their £2.3 billion combination, the imperative for William Hill to find a partner in the online space has increased.
The bookie, which once led the internet market for horse racing and football betting, has fallen well behind its rivals, something which led to the departure of its second chief executive in two years, James Henderson, last week.
Broker Cenkos said a successful bid for William Hill would have to be pitched “well over 400p” and suggested it should find itself a white knight to see off takeover interest.