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Rank, 888, William Hill Three-Way Merger?

The Rank Group, who own and operate 56 Grosvenor Casinos and 96 Mecca Bingo clubs, have joined forces with online operator 888 last month and made a formal £3.6billion bid for William Hill in an attempt to form a three-way merger. The offer is understood to have been the equivalent of William Hill’s current share prices at 346p each, which could rise to 408p when efficiencies and synergy savings are taken into account.

It was believed within the upper hierarchy that an alliance with 888 and Rank could strongly enhance William Hill’s strategic positioning as well as deliver superior value to Hill’s current strategy of diversifying their brand by enhancing their digital and international business.

However, earlier this month, the William Hill board unanimously rejected the offer and claimed that Rank and 888 seriously undervalued them. The also felt that the bid from the consortium was not pitched at a huge premium and there was very little deal about the structure of the business in the event that a merger was agreed.

The ball is now back in the court of 888 and Rank who are understood to still be determined in reaching an agreement. Their combined market value is at £1.6billion compared to William Hill’s £2.85billion, so the consortium may need to raise some serious capital from somewhere if they intend to make a bid that William Hill would be interested in accepting.

Founded in 1934, William Hill have the edge of most of their competition by the way they have successfully adapted from physical high street betting shops (which they still operate) and into an online betting brand, particular with newer formats such as in-play betting on televised football matches which has attracted a younger generation, who are generally more tech-savvy, to the gambling scene. This is a factor that Rank and 888 could be in awe of and attracts them to wanting to work with William Hill.

Mergers seem to be becoming increasingly popular among the gambling industry as Betfair and Paddy Power merged in 2015, while Ladbrokes and Coral are on the cusp of joining forces. As for the future for William Hill, 888 and Rank, watch this space.