888 circled by rivals as LSE share price slumps to 70p

Playtech Plc is reported to have tabled a £700m offer to acquire embattled LSE rival 888 Holdings.

As reported by The Sunday Times this weekend, FTSE 250-listed Playtech’s “£700m swoop for 888 Holdings” was rejected by the board as “undervaluing the company”, according to City sources.

The approach is reported to have taken place in July, with Playtech valuing its offer at a price of 156p per share, seeking to tempt 888’s board into proposing a sale to investors.

The article emphasised ‘fresh pressure’ on Chairman Lord Mendelsohn to arrest the freefall in 888’s share price, which has plummeted to 70p since Playtech’s reported approach, with 888’s corporate value now standing at just over £300m.

In 2023, the former chief political strategist of Tony Blair’s New Labour government, Lord Mendelsohn, has been firefighting major problems at 888, which led to the board removing former CEO Itai Pazner, amid an AML controversy involving the handling of Middle Eastern VIP accounts.

As of October, 888 has embarked on a strategic review led by new CEO Per Widerström. A comprehensive assessment is expected concerning the company’s declining online performance, its strategy following the William Hill acquisition, its stagnant US joint-venture with Sports Illustrated, and the cost control exposure of its +1,400 UK betting shop network.

The plunge in 888’s share price reflects the company’s struggles since its leveraged £2bn acquisition of William Hill Plc, announced in September 2021 and completed a year later.

As a target of Playtech, The Times article stated that the bidder had plans to amalgamate 888’s brands with its SNAI Italia business, with the prospect of potentially forming a separate B2C business.

Playtech governance is reported to have identified “potential savings of up to £170 million” from integrating its business with 888 Holdings, although this figure has not been recognised within Playtech.

As 888 proceeds with its strategic review, City analysts consider the embattled LSE gambling group a vulnerable M&A target. Suitors include DraftKings, who were rumoured to have discussed a bid for the company as a springboard into UK gambling.