888 888 Holdings Plc

LONDON—Shares in bookmaker William Hill PLC jumped 10% on Monday after it acknowledged a takeover approach from a consortium made up of 888 Holdings PLC and Rank Group PLC in the latest sign of consolidation in the British gambling industry.

William Hill said the consortium didn't put forward a proposal or set out a position on price, timing, terms, form of consideration or transaction structure.

William Hill has a market capitalization of £ 2.72 billion ($3.56 billion), while Rank Group is valued at £ 926.3 million and 888 is valued at £ 795.8 million.

888 and Rank shares were trading up about 3% pence and 2%, respectively, shortly after the announcement. William Hill shares continued to trade up more than 6% nearly three hours after their surge.

888 and Rank said the deal would make sense given the three companies' "complementary online and land-based operations" and potential for cost savings.

William Hill, meanwhile, expressed doubts but said it would consider an offer.

"It is not clear that a combination of William Hill with 888 and Rank will enhance William Hill's strategic positioning or deliver superior value to William Hill's strategy," the company said.

According to U.K. takeover rules, the consortium is required to announce a firm intention to make an offer, or walk away, by 5 p.m. London time on Aug. 21.

The merger talks are part of broader consolidation in the European gambling sector amid rising competition and taxation and tighter regulation.

In February last year, 888 terminated talks and rejected a possible offer from William Hill as the companies failed to agree on an offer value. Later in 2015, 888 lost a bid to GVC Holdings PLC after the latter clinched a deal to buy online gambling firm Bwin.party digital PLC for £ 1.12 billion.

A U.K. "point of consumption" tax that came into effect in December 2014 levies a 15% tax on profit made on bets by U.K. consumers. The tax has led to more transparency, giving investors better understanding of the income of online gambling firms and prompting possible M&A activity.

The regulations have also constrained growth and focused companies' attention on lowering costs.

Last year, Ireland's Paddy Power PLC and smaller U.K. rival Betfair Group agreed to a near $8 billion merger. Likewise, betting and gambling services firm Ladbrokes PLC merged with rival Gala Coral Group Ltd.

Write to Razak Musah Baba at Razak.Baba@wsj.com

(END) Dow Jones Newswires

July 25, 2016 06:45 ET (10:45 GMT)

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