888 Holdings share price down, rebuffs £700 million takeover offer from William Hill

Online gambling company 888 Holdings Plc said on Monday it had ended takeover talks with William Hill, the largest bookmaker in the UK, after a major shareholder did not agree with the offered price.

“Due to a significant difference of opinion on value with a key stakeholder, it has not been possible to reach agreement on the terms of a possible offer and the board of the company has agreed with William Hill to terminate discussions,” 888 said in a statement.

Last Tuesday 888 announced it had received a takeover offer from William Hill, which triggered a sharp jump in its shares. Over the past week 888s value has increased more than 20% over the possibility of a sale.

However, on Monday the company said it had ended negotiations with William Hill, which had offered 200 pence a share plus a dividend of 3 pence per share.

The agreement valued the Gibraltar-based company at about £700 million. Following the news 888s shares fell as much as 17.50% to 140.63 pence.

The company has been rumored for years to be considering a possible sale, which never actually materialized, leaving analysts believing that shareholders do not want to sell.

In 2011, 888 ended negotiations with Ladbrokes over a possible acquisition, following four months of discussions, a repetition of the same situation in 2007.

At that time Ladbrokes had offered 70 pence a share, lower than expectation of 80 pence a share. Therefore the agreement broke down with 888 citing that the deal would not have created value for its shareholders.

888 was established in 1997 by the Ben-Yitzhak and Shaked Israeli families, which hold around 60% of all shares in the company.

The Shaked family alone controls over 48.6% of the company via two trusts funds with each holding half of the stake.

William Hill would have benefited from 888s technologies and practices as the bookmaker uses the services of several outsourcing companies. Additionally, 888 has a international base of clients, particularly strong in the US.

William Hill is looking to expand, as many of its peers, after the UK government lifted the tax on in-store gaming machines, pushing casino operators to seek both revenue and customer growth online.

Last November another online gambling company Bwin.Party announced it was entertaining the idea of a possible sale and said it was evaluating several offers it had received. In December The Intertain Group completed the acquisition of online casino operator Dumarca Holdings.

In 2013 William Hill purchased online betting company Tom Waterhouse for around $38 million.

888 Holdings gained 1.34% on Friday and closed at 170.75 pence in London. On Monday the stock was down 15.77% to 143.82 pence at 10:43 GMT, marking a one-year decrease of 1.15%. The company is valued at £605.20 million.