Business

William Hill approached by 888 and Rank for gambling merger

William Hill steeplechase Image copyright William Hill

UK betting firm William Hill has been approached by rival gambling companies 888 and Rank Group about a merger.

William Hill said it would "listen to and consider" any proposal.

However, it was not clear that a combination of William Hill, 888 and Rank would "deliver superior value", the company said.

Online operator 888 and Rank, the UK's biggest casino chain, said they saw "significant industrial logic in the combination".

William Hill said the approach was "highly preliminary", while Rank and 888 said they had not yet made a formal offer to the bookmaker's board.

Shares in William Hill increased 4.8%, while 888 shares rose 3.4% and Rank lost 0.5%.

'Surprise'

The move comes just days after William Hill's chief executive, James Henderson, was ousted from the UK's biggest betting shop operator following a series of profit warnings.

Mr Henderson, who took the helm in August 2014, had failed to resolve problems in the firm's struggling online business.

In May, its most recent trading update, the firm said net revenues had fallen 11% in its online division in the 17 weeks to 26 April.

William Hill's shares have dropped 21% since the start of the year, valuing the former FTSE 100 firm at £2.7bn.

David Jennings, an analyst at Davy, said the news was "undoubtedly a surprise, given that the combined value of 888 and Rank is £1.7bn".

Image copyright AFP/Getty Images

Rank and 888 said there was "no certainty that any transaction will ultimately take place".

Rank's chief executive, Henry Birch, is a former head of William Hill's online division.

Under UK takeover rules, the firms have until 21 August to either make a firm offer or walk away.

The potential bid comes after William Hill tried to acquire 888 last year in a £720m offer, but the deal collapsed after 888 rejected the offer as too low.

Since then, rival betting firms Ladbrokes and Gala Coral have agreed a £2.3bn merger which received preliminary regulator approval in May.

The combined group would make it bigger than William Hill, currently the largest UK bookmaker based on number of shops.

Irish bookmaker Paddy Power and online operator Betfair also agreed to join forces last September.

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