Will Hill Rejects Rank/888 Bid Proposal (update)

Company substantially undervalued, says Will Hill statement

William Hill has acknowledged receipt of an "unsolicited" non-binding, highly conditional proposal from 888 Holdings plc and The Rank Group plc laying out the proposal conditions regarding a potential combination of the three companies as:
– an inter-conditional all-share merger of 888 and Rank, with 888 acting as the acquiring entity, to create BidCo, which would contemporaneously offer to acquire William Hill for cash and newly issued shares in BidCo.
– 199 pence in cash and 0.725 BidCo1 shares per William Hill share which would result in William Hill shareholders owning 44.6 percent of the Combined Group.
– The Proposal represents an estimated value of 364 pence per William Hill share2 (based on the closing price of 888 and Rank on ) with 45 percent of the proposed consideration in the form of BidCo shares.
– The Proposal represents a premium of only 16 percent to the William Hill share price of 314 pence on (being the last trading date prior to the announcement of a possible offer by the Consortium) and a premium of only 11 percent to the William Hill share price of 327 pence on (being the last trading date prior to this announcement).
Having reviewed the Proposal with its financial advisers, Citi and Barclays, the Board of William Hill said it had unanimously rejected the Proposal as it substantially undervalues the company.
William Hill said it 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 described the proposal as a "highly-complicated" three-way combination at a low premium which it considers a substantial risk for shareholders as BidCo would assume around GBP 2.2 billion of leverage in order to fund the cash element of the consideration and refinance existing debt within the three companies.
Gareth Davis, Chairman of William Hill, said: "This conditional proposal substantially undervalues William Hill, is highly opportunistic and does not reflect the inherent value of the business.
"The Group has a strong team to deliver against our strategy to grow our digital and international businesses so we strongly advise that shareholders take no action."

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