William Hill rejects improved offer from Rank and 888

William Hill rejected an improved cash-and-shares offer from Rank Group and 888 Holdings made over the weekend and continued to turn its nose up at the prospect of talks.

Casino operator Rank and online gaming specialist 888 launched the improved offer on Sunday that valued the UK's biggest bookmaker at 394p per shares based on prices on 5 August or 352p at 22 July prices, before the first offer was made.

Having last week snubbed a bid a 30p lower price, William Hill noted the new offer was still "only 12%" higher than its 22 July share price.

The FTSE 250 group, which after a series of profit warnings last month axed its chief executive and saw its shares fall to a four-year low, said it felt that despite the improved price the offer continued to "substantially undervalue" the company and is "highly opportunistic".

Under the revised proposal, Rank and 888 plan to themselves merge into a 'BidCo' and then offer 199p cash and 0.860 BidCo shares per William Hill share, which would result in the bookmaker's current shareholders owning 48.8% of the combined group.

Rank and 888 also foresee the three-way merger extracting at least £100m of costs, which it said would be worth a further capitalised value to William Hill shareholders of 52p per share.

But the bookmaker was unimpressed. "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," it said in a statement on Monday morning.

With the bid deadline looming next Sunday, Rank chief executive Henry Birch said: "With a 48.8% share in the combined business, the largest proportion of the benefits would accrue to William Hill shareholders (as well a significant cash payment), and we hope to engage the William Hill board in constructive discussions to deliver a deal that makes compelling strategic sense for all three businesses."

Birch, who has been proposed as chief executive of the new company, had over the weekend bemoaned William Hill's reticence via the Sunday Times that: “They’ve tried to buy both companies in the past. I struggle to see that they don’t buy the logic.”

888 and Rank will make a further announcement in due course, the pair said.

Shares in William Hill were down more than 3% to 323.4p just after 1000 BST on Monday.