William Hill and 888 Holdings Deal Falls Through

As reported a couple of days ago, British bookmaking giant William Hill approached 888 Holdingsexpressing an interest in a corporate takeover. Although an official offer was not made, the over-the-table talks seemed very serious and the British company seemed genuinely interested.

However, as reported by Reuters yesterday, the deal will not be moving past the talking stage. Some experts hinted at the possibility of 888 Holdings asking for a bigger price per share and that is exactly what happened. As expected, William Hill couldn’t offer a higher price without overextending their budget and the negotiations came to a halt.

The offer on the table amounted to 200p with an extra 3p per share. Although market experts deemed this offer as quite high, it seems from the brief report and the company’s statement that a key stakeholder wasn’t agreeable to the offer and may have asked for as high as 300p per share.

The situation seems fairly similar to one in 2011 when the company was approached by another household name, Ladbrokes, who expressed an interest in buying 888 Holdings. Although the offered price per share was significantly lower, negotiations ended after the key players tried to increase the initial offer more than 10%.

Shares take a dive

When news of the William Hill approach broke out, 888 Holdings saw its share value rise 20%. However, as soon as it was revealed that no takeover would be taking place, the share price began taking a dive.

As independent.co.uk reported yesterday, 888 shares dropped 19p each, which equals around 11%.

Will there be a takeover?

The real question is if 888 Holdings are really trying to squeeze the maximum amount of money from potential suitors or if they are actually interested in selling at all. The company might be coming up with unrealistic proposals just to turn away those interested in buying.

After turning down Ladbrokes (twice) and now William Hill, it doesn’t seem that any company could meet the conditions that 888 Holdings has set. The Independent hinted at the possibility of the Ireland-based Paddy Power trying their luck next. Paddy Power certainly doesn’t lack the means for such a move, but with the high expectations of 888 Holdings, financial feasibility becomes the real question in such a decision.