Rank and 888 continue to pursue triple-merger despite William Hill snub

Rank Group and 888 Holdings set out their case late on Wednesday for their joint merger proposal for William Hill, even though the bookmaker had the previous day dismissed the offer as too low and ill-conceived.

Acknowledging William Hill's rejection of a proposal valuing the bookmaker company at 364p per share, 888 and Rank argued their case in a statement released at 1628 BST on Wednesday, saying a deal "represents a compelling value creation opportunity" and urging the FTSE 250 company's board to enter talks.

The pair said the combined group would, thanks to its larger scale and diversification, "create significant cost and revenue synergies, increased marketing effectiveness, effective entry into new markets, and mitigation against any adverse regulatory change", with net annual synergies of "at least £100m".

William Hill, which last year failed in its own bid for digital specialist 888 and this year has seen its shares fall from almost 400p to a recent low below 260p, had dismissed the proposal as unlikely to enhance its existing digital-focused strategy or improve value for shareholders and also raised concern about the £2.2bn of gearing necessary to finance the cash element of the bid.

Rank and 888 said, as well as propelling the merged group into the FTSE 100, they expected "rapid deleveraging" afterwards, predicting the ratio of net debt would fall to between 2.5-3.0 times EBITDA within two years.

The pair, who are being advised by Morgan Stanley with Ernst & Young as accountant, said they expect the combined group would be able to maintain a dividend payout policy of approximately 40% earnings.

With William Hill having recently ejected its chief executive, 888 and Rank propose that Rank CEO Henry Birch would become CEO of the enlarged group and 888 CEO Itai Frieberger would become CEO of the digital operations.