888-rank Consortium Ups Offer For William Hill (update)

But William Hill again rejects bid

In a statement Monday the UK online and land gambling group William Hill plc advised that it had received a revised acquisition bid from the 888 Holdings-Rank plc alliance on Sunday 14 August, but that the board of directors had again rejected the proposal.
The company revealed that the non-binding bid comprises 199 pence in cash and 0.860 BidCo shares per William Hill share, and would result in William Hill shareholders owning 48.8 percent of the combined group.
"With the exception of William Hill shareholders' proposed ownership of the combined group, none of the other key terms of the Revised Proposal have changed from the original proposal of ," the statement reveals. "Based on the unaffected combined market capitalisation of the three companies adjusted for the cash component of the Revised Proposal, this equates to an estimated value (before any synergy benefits) of 352 pence per share.
"The Consortium's previous proposal has an estimated value of 339 pence per share on the same basis. The Revised Proposal represents a premium of only 12 percent to the William Hill share price of 314 pence on ."
The statement goes on to advise that the William Hill directors had unanimously decided to reject the offer "…as it continues to substantially undervalue William Hill and as such the Board continues to see no merit in engaging with the Consortium."
The advisory notes that the directors continue to believe that the latest offer by 888-Rank is highly opportunistic and does not reflect the inherent value of the Group.
"Under the Revised Proposal, William Hill shareholders continue to be offered a substantial proportion of their consideration in highly leveraged BidCo shares and so it is directly relevant that the Board of William Hill continues to believe that a combination of William Hill with 888 and Rank will not 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." the statement points out.
It concludes by flagging other considerations:
* The Revised Proposal continues to present significant risk for William Hill shareholders as it involves a highly complicated three-way combination at a very low premium;
* There is still substantial risk for William Hill shareholders in the achievement of the estimated future cost synergies, which are only expected to be achieved in full by the end of 2020; and
* The Revised Proposal continues to result in the combined group operating with substantially increased leverage of approximately GBP 2.2 billion, carrying a much higher interest charge.
Gareth Davis, chairman of William Hill, observed:
"This revised proposal continues to substantially undervalue the company and the cash element of the proposal has not changed. Therefore, the Board sees no merit in engaging. As we have said before, this is highly opportunistic and complex and does not enhance the strategic positioning of William Hill. The Board continues to believe we have a strong team to deliver superior value to our shareholders and trading at the start of the second half gives us renewed confidence in our stand-alone strategy."

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