LONDON (dpa-AFX) - William Hill PLC (WMH.L) confirmed that it has received an unsolicited non-binding highly conditional proposal from 888 Holdings plc (888.L) and The Rank Group plc (RNK.L) regarding a potential combination of the three companies. Board of William Hill has unanimously rejected the Proposal as it substantially undervalues William Hill.
The Proposal comprises 199 pence in cash and 0.725 BidCo shares per William Hill share, and would result in William Hill shareholders owning 44.6% of the Combined Group. The Proposal represents an estimated value of 364 pence per William Hill share (based on the closing price of 888 and Rank on 5 August 2016) with 45% of the proposed consideration in the form of BidCo shares. The Proposal represents a premium of only 16% to the William Hill share price of 314 pence on 22 July 2016 and a premium of only 11% to the William Hill share price of 327 pence on 8 August 2016.
In addition, the Board of William Hill does not believe that a combination of William Hill with 888 and Rank will enhance William Hill's strategic positioning or deliver superior value for shareholders compared against William Hill's strategy, which is focused on increasing the Group's diversification by growing its digital and international businesses.
William Hill said it has also taken into consideration the substantial risk for William Hill shareholders presented by the Proposal, which involves a highly complicated three-way combination at a low premium with BidCo assuming approximately £2.2 billion of leverage in order to fund the cash element of the consideration and refinance existing debt within the three companies.
As per the U.K. rule, the Consortium is required, by not later than 5.00 p.m. on 21 August 2016 to either announce a firm intention to make an offer for William Hill or announce that it does not intend to make an offer.
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