August 18, 2016 / 6:10 PM / in 3 years

Bookmakers Rank Group, 888 drop pursuit of rival William Hill

(Reuters) - Casino and bingo hall operator Rank Group Plc and online gambling company 888 Holdings Plc ended efforts to take over rival British bookmaker William Hill Plc days after a revised offer was rejected.

A cyclist passes a William Hill betting shop in London, Britain July 25, 2016. REUTERS/Neil Hall

Rank and 888 had wanted to join up with William Hill to create Britain’s largest multi-channel gambling operator by revenue and profit, with 92 percent of its business from regulated markets.

But the two companies said in a joint statement on Thursday they had not been able to meaningfully engage with William Hill’s board and did not intend making an offer.

Gambling faces higher taxes and tighter regulation, and a series of mergers has intensified competition as firms market themselves to younger sports fans betting via mobile apps.

Rank and 888 had estimated that the three-way deal would result in savings of 100 million pounds a year from lower third-party fees and reduced IT spending.

However, William Hill spurned the consortium’s initial 3.16 billion-pound cash-and-shares proposal, saying it substantially undervalued the business. It rejected a revised takeover proposal on Monday, saying it continued to see no merit in engaging with the consortium.

Britain’s biggest bookmaker at the start of 2015, William Hill is set to lose its leading market position in the gambling sector as rival Ladbrokes Plc overtakes it in number of betting shops when it merges with Gala Coral later this year.

William Hill was quick to embrace Britons’ changing gambling habits, such as placing bets online using smartphones and tablets, often “in play” while watching sport like soccer on TV, but its lead has vanished as its apps failed to retain punters.

The company sacked its chief executive in July and earlier this month reported a 16 percent fall in first-half operating profit.

On Thursday, William Hill noted the consortium’s decision and said it had a clear plan to grow by diversifying digitally and internationally.

It also said it expects operating profit for 2016 to be at the top end of its previous forecast of 260 million to 280 million pounds, citing a better than expected Euro 2016 outturn and stronger growth in gaming machine net revenue.

Shares in William Hill closed down 1.5 percent at 303.1 pence on the London Stock Exchange. 888’s shares closed up 2.37 percent at 205 pence, while Rank Group’s shares closed down about 1 percent at 221.6 pence.

Reporting by Pranav Kiran in Bengaluru; editing by Susan Thomas

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