LONDON (Reuters) - British bookmaker William Hill rejected a revised takeover proposal from rivals 888 Holdings and Rank Group (LON:RNK) on Monday, saying it continued to see no merit in engaging with the consortium.
Casinos and bingo halls operator Rank and online gambling group 888 want to join up with William Hill to create Britain's largest multi-channel gambling operator by revenue and profit. They say a combination will result in cost savings of 100 million pounds a year.
However, William Hill spurned the consortium's initial 3.16 billion-pound cash-and-shares proposal last Tuesday, saying it "substantially undervalued" the business.
It said a revised proposal was received on Sunday, comprising the same 199 pence per share in cash but 0.86 new shares in the bidding company instead of the 0.725 shares previously offered, which would result in William Hill shareholders owning 48.8 percent of the combined group, up from 44.6 percent under the original proposal.
William Hill said that with the exception of the change to its shareholders' proposed ownership of the combined group, none of the other key terms of the revised proposal had changed from the original approach.
It said that based on the combined market capitalisation of the three companies on July 22, adjusted for the cash component of the revised proposal and before any synergy benefits, the offer equated to an estimated value of 352 pence per share - a premium of 12 percent.
It said the consortium's previous proposal had an estimated value of 339 pence per share. July 22 was the last trading day prior to the announcement of a possible offer by the consortium.
"This revised proposal continues to substantially undervalue the company and the cash element of the proposal has not changed. Therefore, the board sees no merit in engaging," said William Hill Chairman Gareth Davis.
“This latest proposal moves nothing forward - I can’t engage in something based on risk, debt and hope," he said.
The consortium said the revised proposal was worth 394 pence a share to William Hill shareholders.
However, that valuation was based on the closing share price of 888 shares on August 5 - the last trading day prior to the consortium's submission of the original proposal.
Shares in William Hill were down 3.1 percent at 323.8 pence at 0858 GMT, which analysts said indicated investors were unimpressed by the latest proposal.
Under UK takeover rules the consortium has until August 21 to either announce a firm intention to make an offer or walk away.