Investors appear unhappy with William Hill’s (WMH) rejection of 888 Holdings (888) and Rank’s (RNK) latest offer regarding a combination of the three firms, with shares in the bookie falling 2.6% to 325p.

The offer of cash and shares is estimated to be 352p, which is higher than the previous bid of 339p on 9 August.

The new proposal comprises 199p in cash and 0.860 BidCo shares per William Hill share, and would result in its shareholders owning 48.8% of the combined group.

William Hill says it rejected the offer as it represents a premium of only 12% to its share price of 314p on 22 July. It is the second time the company has rejected a takeover offer in a week.

Davy Research has previously supported William Hill’s opposition to a bid, stating the conditional offer on 9 August was ‘cash-poor, debt-heavy, strategically questionable and high opportunistic.’

The analyst believes the business can be fixed, but argues that more debt in a volatile economy will not help.

If future bids are successful, the merger will create a high street betting company with a 25% share of the online market, according to Berenberg.

The deal will also follow a trend of mergers in the gambling sector, including a potential deal between Coral and Ladbrokes (LAD), as well as a £5 billion merger between Paddy Power and Betfair - now trading as Paddy Power Betfair (PPB).

William Hill has been struggling as a result of a decline in online revenue in the first quarter, which was mainly due to losses suffered from Cheltenham and strong football results for gamblers.

New legislation introduced last year has also hit William Hill’s profits, by forcing firms to provide automatic self-exclusions and time-outs, allowing gamblers to restrict themselves from placing bets.

Earlier this month, chief executive James Henderson was sacked after failing to turn the company around.

Issue Date: 15 Aug 2016