Rank And 888 Back Out Of William Hill Deal

Casino giant Rank Group and online operator 888 Holdings have abandoned their pursuit to tie-up with high street bookmaker William Hill (Frankfurt: 633847 - news) , after making a formal £3.6bn offer for a three-way merger earlier this month.

The firms said they "do not intend to make an offer for William Hill and are withdrawing their proposal for a possible combination of the three companies".

On Monday William Hill's board rejected the £3.6bn offer tabled by Rank and 888 as "substantially undervaluing the firm".

William Hill shares bounced up more than 6% following the announcement in early trading.

The chief executive of 888, Itai Frieberger, expressed disappointment that the board of William Hill did not share their vision of a combined business.

"We believe that there was compelling industrial logic for the combination of these highly complementary businesses," he said.

Rank Group and 888 anticipated the three-way merger would create the UK's "largest multi-channel gambling operator", and would deliver £100m in cost savings annually.

In response to the withdrawal, William Hill said it plans to continue to focus on its own strategy to deliver value to shareholders.

"The team has a clear plan to grow by diversifying digitally and internationally and four priorities to get us there," William Hill chairman Gareth Davis said.

"We have had a good start to the second half of the year and the board now expects operating profit for 2016 to be at the top end of the previously guided £260-£280m range."

The bookmaker announced in May that net profits were down 3% in the first quarter and the board expressed dissatisfaction with the firm's stalling online growth, under the helm of former chief executive James Henderson, who stepped down in July.