William Hill has rejected a takeover offer from Rank Group and 888, saying that the duo’s proposal for a £3.6 billion three-way merger “substantially undervalues” the high street bookmaker.
Responding to a formal takeover approach from the casino giant and online operator, William Hill said it does not believe a tie-up would enhance its “strategic positioning or deliver superior value for shareholders” compared with its own strategy.
The firm said: “Having reviewed the proposal with its financial advisers, Citi and Barclays, the board of William Hill has unanimously rejected the proposal as it substantially undervalues William Hill.”
The offer, amounting to 364p per share, also involved saddling the newly formed company with £2.2 billion of debt.
Gareth Davis, chairman of William Hill, said: “This conditional proposal substantially undervalues William Hill, is highly opportunistic and does not reflect the inherent value of the business.
“It is a very complex three-way combination at a low premium involving substantial risk for William Hill shareholders: execution risk, integration risk and risks of materially increased leverage. The group has a strong team to deliver against our strategy to grow our digital and international businesses so we strongly advise that shareholders take no action.”
Last week, William Hill said that half-year profits were boosted by a strong Euro 2016, which helped to offset a dire Cheltenham Festival.
Commenting on the results, interim chief executive Philip Bowcock told investors: “While the first half of 2016 has been challenging, William Hill is a strong business with three of our four core divisions performing well.”
William Hill is a major employer in Yorkshire, with more than a fifth of its global workforce in the region.
The company employs 1,300 people in Leeds alone.