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By Paul Sandle
LONDON, July 24 (Reuters) - Online gambling group 888Holdings and casino operator Rank Group arejoining forces with a view to making a bid for William Hill, the British bookmaker that fired its chief executive onThursday for losing ground online to rivals.
If successful, the three-way deal will bring together one ofthe leading online gambling players, Britain's top casino andbingo hall operator and the country's biggest high streetbookmaker.
"The Consortium sees significant industrial logic in thecombination, through consolidation of their complementary onlineand land-based operations, delivery of substantial revenue andcost synergies and from the anticipated benefits of economies ofscale," 888 and Rank said in a joint statement.
The companies added that no formal approach had yet beenmade to William Hill's board.
"Accordingly, there can be no certainty that any transactionwill ultimately take place, nor as to the terms on which anysuch transaction might be constituted."
The Sunday Times earlier reported that Rank was in talkswith 888 about creating a 2 billion pounds ($2.6 billion)gambling group, potentially with the aim of launching a 3billion pound bid for William Hill.
A spokesman for Rank declined to comment on whether thegroups would pursue a merger if their consortium failed to landWilliam Hill.
Under British takeover rules, the companies have untilAugust 21 to make a firm offer or else walk away.
THREE-WAY BET
A three way tie-up would be the latest, and potentiallybiggest, major deal in an industry consolidating in the face oftighter regulations and rising taxes.
William Hill was quick to embrace Britons' changing gamblinghabits, such as placing bets online using smartphones andtablets, often "in play" while watching sport like soccer on TV,but its lead has vanished as its apps failed to retain punters.
It is a market leader with 2,370 bookmakers on the highstreet, providing betting on traditional horse and greyhoundracing, and gaming on machines.
The company made an early attempt to consolidate with a 720million pound bid for 888 last year, but it could not agree onprice with major 888 shareholder, Israel's Avi Shaked. Avi andhis brother Aaron Shaked own about half of 888 through familytrusts, according to Thomson Reuters data.
The brothers have built one of Britain's biggest onlinegambling groups, offering sports betting as well online bingoand casino games. Rank, meanwhile, is Britain's biggest operatorof bingo halls and casinos.
Since William Hill's failed bid, rivals Ladbrokes and Gala Coral have agreed a 2.3 billion pound deal, which willknock William Hill off the top spot, while Paddy Power and Betfair agreed to join forces in September.
888 had agreed to buy UK-listed Bwin.party last year, but itwas jilted in favour of a GVC Holdings.
Frustrated at the poor online performance, William Hill'sboard sacked chief executive James Henderson on Thursday afteronly two years.
Shares in William Hill had declined 31 percent in the 12months before Henderson was sacked, hitting a three-year low inJune and valuing its equity at about 2.75 billion pounds.
888's shares have risen by 29 percent in the same period,giving it a value of 800 million pounds, while Rank's stock hasslipped 3 percent, making it worth about 935 million pounds.
A spokesman for William Hill said the company would commentin due course.
(Editing by Raissa Kasolowsky and Clelia Oziel)
Rank (RNK)