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Rank/888 Holdings Making Play for William Hill

UK-based Rank Group and Gibraltar-based 888 Holdings confirmed rumors this weekend that they have teamed up in talks to acquire competitor William Hill, the largest gambling company in the UK. No financial numbers have been made public.

Both 888 and Rank issued a statement today, which reads, in part:

888 Holdings plc (“888”) and The Rank Group Plc (“Rank”) (together the “Consortium”) note the recent press speculation regarding a potential transaction involving William Hill plc (“William Hill”) and confirm that they are evaluating a possible offer for William Hill (the “Proposed Transaction”).

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.

No formal approach has yet been made to the Board of William Hill and there can be no certainty that any such approach will be made.  Accordingly, there can be no certainty that any transaction will ultimately take place, nor as to the terms on which any such transaction might be constituted.

In accordance with Rule 2.6(a) of the Code, 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 in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

This is an interesting twist on past gaming industry mergers and acquisitions news, as in February 2015, the roles were reversed, with William Hill looking to buy 888 Holdings.

888 was also at the center of the bidding war for bwin.party nearly a year ago. 888 and GVC Holdings went back and forth with competing offers for the partypoker parent company, with GVC Holdings eventually winning the competition. GVC’s successful offer was for £1.116 billion (USD $ 1.697 billion).

Gaming analysts see the potential hiccups with a deal like this, though very rarely in huge mergers are there no hurdles to overcome. Warwick Bartlett, Chief Executive of Global Betting and Gaming Consultants told GamblingInsider.com:

When I first saw the reports about a possible offer being made between Rank (market cap £925m) and 888 (£803m), I thought this could work. With Rank and 888 having a combined market cap of £1.7bn against William Hill at £2.7bn we should be under no illusions as to who the daddy would be. Clearly the companies are being driven closer together because of the combined effects of ever increasing regulation, and taxation. The combined market cap of all three would be £4.4bn, and one would expect to see some significant synergies and savings on cost.

But I have to ask: Is this Gala Coral mark two? That was a company that had interests in bingo, casino and betting shops, plus an online business. It was hardly a success. The bingo business was sold to Caledonia, and ironically the casino business was sold to Rank.

For this tripartite merger to work there must be a clear emphasis on strategy and leadership. I think such a merger raises more questions than answers.

Poker fans will obviously be familiar with 888 for its 888poker, which is the second largest online poker room in the world in terms of cash game traffic, according to PokerScout. 888 Holdings also has a sizable casino gaming and bingo library. Rank is not a household name, but UK gamblers certainly know the Grosvenor Casinos well. Rank also owns the Mecca and Enracha brands.

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