William Hill from hunter to prey

Leaving abruptly after 30 years at the same company is bound to raise eyebrows. It certainly did when chief executive James Henderson left William Hill last week. And they were raised again Monday after the £2.9 billion high street bookie confirmed it has received a bid approach from online gambling firm 888 and Mecca bingo owner Rank.

According to the Sunday Times, the trio have been in talks for a while, and the pair confirmed this morning they saw "significant industrial logic" in a deal, talking of "substantial" revenue and cost savings.

Exactly how any tie-up would be structured remains unclear, however. Hill will listen to suitors, but says the approach is "highly preliminary" and that it had not received any proposal or detail on price, timing or other terms. It also doubts whether a deal would "enhance its strategic positioning or deliver superior value to William Hill's strategy".

A failure to do deals of its own makes Hill vulnerable. Big tax hikes have forced a major round of industry consolidation, and last year Hill tried to buy 888 for a little over 200p a share, but was turned down on price.

888, itself, attempted to snap up Bwin.party, but was pipped at the post by GVC. Elsewhere, Betfair and Paddy Power jumped into bed together, forming Paddy Power Betfair, and Ladbrokes and Gala have done their own deal. Hill shares have since hit a four-year low and seriously underperformed the sector.

It might have more betting shops than anyone else, but it was Hill's failure to drive online business that cost Henderson his job. Net revenue fell 11% in the first four months of this year, and growing the digital business remains the core focus.

There's no way finance chief Philip Bowcock, in charge on a temporary basis after only eight months at the company, will get the top job. Interestingly, the Financial Times said last week that Henry Birch was being considered for the role. Not only is he currently Rank's CEO, but he ran Hill's online business for four years until 2012.

Birch is certainly in a great position to make this deal work if the three of them can agree on price. They've got until 21 August to thrash it out.

We may hear more when Hill announces results for the six months to 28 June 2016 on 5 August.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.