William Hill has fired a shot across the bows of suitors Rank Group and 888 amid scepticism that the pair would be able to pull off an ambitious three-way tie-up with Britain’s biggest bookmaker.
Rank, the operator of Grosvenor casinos and Mecca bingo halls, and online gambling business 888 are eyeing a consortium approach for struggling William Hill, in what would mark the latest deal to shake-up the gambling industry.
The potential bid leaked at the weekend, forcing the high street bookie to confirm today that it had received “a highly preliminary approach” that did not set out price or other terms.
William Hill said it would “listen to and consider any proposal which might be forthcoming”, but it also warned that it was “not clear” that a tie-up with Rank and 888 would “enhance” its “strategic position or deliver superior value”.
Analysts were similarly cautious about the prospects for a deal, given the complexity of a consortium bid. William Hill shares initially leapt as much as 12.8pc but only closed up 4.8pc at 328.8p as investors tempered their excitement about a tie-up as the day wore on.
Simon French, an analyst at stockbroker Cenkos, warned that “it is not immediately apparent” that 888 and Rank have the “skill set” to revive William Hill’s troubled online sportsbook or its estate of about 2,300 betting shops.
Meanwhile, Davy analysts said that “questions relating to funding would need to be answered” because, even combined, 888 and Rank are still much smaller than the high street bookie.
While a deal between William Hill and 888 makes sense and a takeover was attempted by the former last year, the Davy analysts were more sceptical about the “strategic rationale” of combining a betting shop business with a casino and gambling operator like Rank.
Both 888 and Rank have dominant shareholders - the Shaked brothers at the former and Malaysian billionaire Quek Leng Chan at the latter – which analysts said further complicates a deal and could make a merger unattractive to Hill’s investors.
Under Takeover Panel rules, 888 and Rank have until August 21 to make a formal offer or walk away. It is possible that William Hill, left vulnerable after its board ousted under-performing chief executive James Henderson last week, now attracts a rival bidder.
888 shares rose 3.4pc and Rank slipped 0.5pc.
Britain's gambling industry is in the midst of consolidation, with Paddy Power and Betfair completing a merger earlier this year and Ladbrokes and Coral in the midst of securing regulatory approval for a tie-up.
The Competition and Markets Authority is expected to publish its final report into the Ladbrokes-Coral deal tomorrow. In May, it provisionally recommended they sell as many as 400 betting shops to assuage concerns about competition.