Rank Group, 888 submit 3.6 billion pound bid for William Hill - FT

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Aug 9 (Reuters) - William Hill rejected a 3.16 billion pound ($4.11 billion) bid by smaller rivals Rank Group and 888 Holdings on Tuesday, saying a 16 percent premium "substantially undervalued" the British bookmaker. The offer to Hills' shareholders consisted of 199p in cash and 0.725% per share in the new entity, which would have given Hills' shareholders a almost 45% stake in the enlarged betting behemoth. Recent deals include Paddy Power Plc's 2.9 billion-pound takeover of Betfair Group Plc.

In a statement, William Hill confirmed it received a £3.6bn proposal from a Rank and 888 consortium, which was first reported this morning.

Both Rank and 888 are yet to comment in response.

Gareth Davis, the bookie's chairman, said: "This conditional proposal substantially undervalues William Hill, is highly opportunistic and does not reflect the inherent value of the business".

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In a press release issued by William Hill (and found on the website of 888 Holdings, oddly enough), it was revealed that 888 and Rank would create a new company, BidCo, which would then make the acquisition offer to William Hill. The proposal, which it is understood would also see the combined business take on a considerable amount of debt, also outlines synergies that Rank and 888 have argued push the value of the deal up to 408p-a-share.

On July 25 Rank Group and 888 said they were considering a tie-up with William Hill, adding that there was "significant industrial logic" in the combination. The proposed purchase price was estimated at 364 pence per share of William Hill.

The bidders are likely to come back with an increased offer, though may lack the financial resources to pay what William Hill would find acceptable, said Alistair Ross, an analyst at Investec in London.

The offer heaps more pressure on William Hill, which last month ousted Chief Executive Officer James Henderson as it struggles to keep pace in the fast-growing world of online betting.

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