Rank/888 turned down by William Hill again

iam Hill has announced it has rejected another joint takeover proposal from Rank Group and 888 Holdings, this time equating to a value of approximately 352p per share.

While that figure is lower than the previous proposal’s 364p per share, valuing the operator at up to £3.6bn, William Hill's valuation is based on the 22 July unaffected combined market capitalisation of the three companies adjusted for the cash component of the revised proposal, and the previous proposal was 339p per share on the same basis.

The date of 22 July was before rumours of any potential deal surfaced and the 352p per share value represents a premium of 12% on the William Hill share price of 314p on that date.

888 and Rank announced a different valuation of 394p per share when announcing they had made an improved proposal, though that was based on the closing price of 888 shares on 5 August, the last business day prior to the proposal being made.

William Hill was offered a 48.8% share of the prospective enlarged group, up from 44.6% in the previous proposal, with Rank owning 27.4% and 888 owning 23.8%.

William Hill said: “Having reviewed the revised proposal with its financial advisers, Citi and Barclays, the board of William Hill has unanimously rejected the revised proposal as it continues to substantially undervalue William Hill and as such the board continues to see no merit in engaging with the consortium.”

As with the previous proposal, William Hill Chairman Gareth Davis called the approach “highly opportunistic.”

The terms of the previous proposal outlined a plan for Rank and 888 to merge as part of the deal, with 888 acting as the acquiring entity.

888 and Rank said in a joint statement: “888 and Rank have made an assessment of cost synergies for the enlarged group and have identified savings of at least £100m (net of dis-synergies) per annum.

“These cost savings, if capitalised at the blended enlarged group historic EV/EBITDA multiple of 9.4x, would represent an implied capitalised value of £940m, the benefits of which if they were to arise would accrue to all shareholders.”