William Hill shares rose in London after the bookmaker softened the blow of an abandoned takeover by saying full-year profit would be at the top end of its target range.
The company has made “a good start” to the second half, it said after markets closed on Thursday.
Earlier, 888 Holdings and Rank Group gave up on a proposal to combine with William Hill after their increased £3.1 billion (€3.58 billion) bid was rejected.
William Hill shares rose as much as 6.4 per cent to 322.6 pence, boosting the bookmaker’s market value to about £2.8 billion.
Consolidating market
The stock remains below the value of the abandoned bid, which Rank and 888 said was worth 394 pence a share. The failure of the bid leaves William Hill to seek a turnaround in a rapidly consolidating market where competition has never been greater.
The company needs to find a new chief executive after James Henderson was ousted a month ago.
Among its biggest challenges will be to revive a struggling online business, one of the main reasons the bookmaker cut profit guidance in March.
The company anticipates operating profit for the year will be closer to £280 million than £260 million, it said on Thursday.
The increased guidance reflects better-than-expected returns from the Euro 2016 soccer tournament, and stronger revenue growth from the gaming machines inside its betting offices.
Rank and 888 said they withdrew their proposal for a cash-and-share takeover after failing to “meaningfully engage” with the board of William Hill. Under UK rules, they cannot make a hostile bid for at least six months unless someone else does.
‘Stymied’
"The consortium was stymied by not being able to increase their cash offer without further increasing the leverage on the combined entity," Simon French, an analyst at Cenkos Securities, said in a note. "The alternative was to increase the paper component of the offer, but this would further dilute the respective major shareholders, also an unacceptable outcome."
Malaysia’s Hong Leong owns 56.1 per cent of Rank, while Israel’s Shaked and Ben-Yitzhak families hold 50.7 per cent of 888.
A deal would have spurred a round of betting-industry consolidation that has included the combination of competitors Ladbrokes and Gala Coral, as well as Paddy Power and Betfair.
Analysts at Berenberg said it was unlikely that other suitors would emerge for William Hill. The company is too big for other UK betting operators to absorb easily, they said, and unattractive to private equity because it would offer insufficient returns. – (Bloomberg)
