William Hill turns nose up at Rank-888 merger proposal, again

William Hill has again given the cold shoulder to a joint merger proposal by smaller suitors Rank Group and 888 Holdings and despite its troubles this year continued to haughtily turn its nose up at the prospect of talks.

Just before trading closed on Wednesday, Rank and 888 confirmed their rumoured 364p-per-share proposal as well as arguing their case and urging the bookmaker's board to enter discussions, even though it had already rejected the then-rumoured approach on Tuesday.

On Thursday, despite having recently axed chief executive James Henderson after a series of profit warnings saw the shares fall from almost 400p at the start of the year to a recent low below 260p, Hills continued to adopt its lofty attitude, repeating its view that the "highly opportunistic" £3.2bn bid "substantially" undervalues the company and as such the board "continues to see no merit in engaging with the consortium".

Responding to the overnight claims from Rank and 888, it added that a merger would be a "significant risk" for William Hill shareholders due to the "highly complicated three-way combination at a very low premium", while casting doubts on the suitors' claims that £100m cost synergies could be achieved and the fact that they could only be wrought by the end of 2020.

Rank and 888 had said on Wednesday that 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.

But Hill's chairman Gareth Davis added: "The board continues to see no merit in engaging on the basis of a proposal that substantially undervalues the group. In addition, as we have said before this proposal is highly opportunistic, complex and poses significant risk for our shareholders."

The suitors, who are being advised by Morgan Stanley, said they expect the combined group represented "a compelling value creation opportunity", able to offer shareholders a dividend payout policy of roughly 40% of earnings and, with William Hill having temporarily promoted CFO Philip Bowcock to the CEO role, proposed Rank CEO Henry Birch would become CEO of the enlarged group.