Operating without the benefit of a Chief Executive Officer (CEO) since July 21st of this year, British gambling titan William Hill nonetheless offered a tepid response to the recent takeover bid offered by rival 888 Holdings and Rank Group.
The beleaguered betting firm issued a brief statement to reject the terms of the merger bid:
“It is not clear that a combination of William Hill with 888 and Rank will enhance William Hill’s strategic positioning or deliver superior value to William Hill’s strategy.”
When news of the potential £3 billion acquisition offer was first announced – less than a week after James Henderson, William Hill’s embattled CEO, suddenly stepped down – 888 Holdings and Rank Group issued a joint statement explaining their motivations:
“The consortium sees significant industrial logic in the combination, through consolidation of their complementary online and land-based operations, delivery of substantial revenue and cost synergies and from the anticipated benefits of economies of scale, which will accrue to all shareholders.”
The London-based William Hill is the world’s largest bookmaker, operating on an independent basis since its founding in 1934.
Despite the company’s long lineage, and successful adaptation to the rise of online gambling, shares have tumbled due to a recent run of poor performance. This includes an announcement delivered to investors warning that profits on the year through December 31st would be only £260 million, rather than the £307 million which was initially estimated. This profit warning was attributed to a disastrous turn of events for bookmakers at the Cheltenham Festival, the U.K.’s premier horse racing event.
Speaking to the Financial Times, Gavin Kelleher, a research analyst at Goodbody, observed that William Hill has been forced to deal with an unusual confluence of detrimental effects within a short period of time:
“It’s been a perfect storm of negatives for William Hill. They have been underperforming when all their competitors have improved massively. They’ve had regulation go against them, their marketing spend hasn’t increased, and they’ve had tech problems.”
Although 888 Holdings lacks William Hill’s history, having been founded in 1997, through its comprehensive online gambling package consisting of casino games, poker, and sports betting, the Gibraltar-based company has emerged as a chief rival in recent years.
The British gambling operation Rank Group runs 56 casinos under the Grosvenor brand throughout the U.K., along with 96 Mecca Bingo clubs and an online gaming network.
It wasn’t too long ago – February of 2015 to be exact – that William Hill was putting the same acquisition pressure on 888 Holdings. That takeover bid, valued at £700 million, failed to deliver the combination of land-based bookmaking operations and online gambling platforms that William Hill executives had hoped to create.
Less than two years later and the tables have turned dramatically, with 888 Holdings leading the charge to bring William Hill into the fold.
The move towards an eventual merger continues the growing trend of consolidation within Europe’s online gambling industry. British betting firms Ladbrokes and Coral Gala recently agreed to a £3.3 billion merger, while Irish bookmaker Paddy Power joined forces with London-based rival Betfair in a £5 billion deal.
While industry experts expect the negotiations to continue between William Hill and 888 Holdings, the former is maintaining a proverbial “poker face,” continuing to operate aggressively. William Hill just paid £13.5 million for digital gaming solutions company Grand Parade, while also signing sponsorship arrangements with English Premier League football clubs Everton and Tottenham Hotspur.