Massachusetts’ Special Commission Issues Online Gambling Report [...]
William Hill’s Board of Directors Reject Takeover Proposal
- August 10, 2016 By Oliver Young -
Last month we reported that Rank Group and 888 Holdings were planning a joint bid for William Hill. We also stated that William Hill are probably not going to accept the bid, if there is was. Now, it has been announced that there was a submission of a formal bid, and as it was suspected, the offer was rejected. We are yet to see whether William Hill is going to maintain its position as one of the leading UK casino and betting operators.
The main motivation behind the merger attempt was to create a larger organisation that will combine William Hill’s strong presence in the land-based betting industry with 888’s online success and Rank’s bingo and casino websites.
It has been said that the tighter regulations and increased taxes encourage companies to join operations and merge. Earlier this year, two of the leading betting operators Betfair and Paddy Power merged, whereas Ladbrokes and Gala Coral are also going to become one corporation.
Hill’s Chairman Branded Said the Offer Was ‘Opportunistic’
According to the laws and regulations in the UK, the two companies had to submit a formal bid until the 21st of August this year, but they did so earlier. The offer has been valued at £3.16 billion, but other news outlets reported of an offer above £3.5 billion. The offer was a combine cash and stock offer, where each shareholder would receive almost two pounds, or 199p per share in cash and a 0.725% of a share in the new company, which would’ve meant that William Hill’s shareholders would control almost 45% of the new entity.
However, William Hill’s chairman stated that the board of directors of the company firmly and unanimously refused the offer. The chairman also stated that the offer is too low and that it undervalues the company.
Moreover, he stated that accepting the bid would result in serious risks for the shareholders, including integration risk, as well as execution risk. The offer might also materially increase the leverage. Hills chairman, Gareth Davis went even a step further and called the offer ‘opportunistic’.
Optimism despite Profit Decrease
William Hill have previously admitted that the company’s online operations aren’t going as planned. The interim chief executive, Philip Bowcock who assumed the role after the former executive James Henderson was sacked, admitted that William Hill had problems with its new app.
It has also been announced that even though the company made some profits on football betting, it still suffered a significant decrease in operating profits. Hill lost £5.5 on the Cheltenham horse racing events this year. The operating profits for the first half of this year were only £131m as opposed to over £150 million last year. The total turnover was up by 1% to somewhat above £814 million.
Both Davis and Bowcock were optimistic about the future of the company. Davis stressed that the company has a dedicated management team whose contribution would ensure that Hill will manage to achieve the desired growth. Bowcock pointed out that the company took necessary steps to improve its online operations, but added that there are still things that need to be done.