(Alliance News) - Evoke PLC shares rose on Monday after confirming it is in talks over a possible GBP200 million takeover by Bally's Corp's Intralot-backed vehicle, though analysts questioned whether the proposed terms will win investor support.

The Gibraltar-based owner of sports betting and gambling platforms William Hill and 888 said discussions centre on a possible all-share offer worth around 50 pence per share, a roughly 32% premium to Friday's closing price.

The stock rose 8.5% to 42.15p in London on Monday afternoon, remaining below the indicative offer level and giving the company a market capitalisation of GBP175.1 million. The shares are down 9.2% over the past 12 months.

Evoke said the potential deal would likely include an all-share combination with a partial cash alternative. Bally's has until May 18 to confirm a firm intention to bid or walk away.

Analysts said the muted share price reaction reflects doubts about both the structure of the offer and the company's underlying challenges.

Russ Mould, investment director at AJ Bell, said Bally's move represents a "contrarian bet" on a business that has faced sustained pressure.

"A grinding decline in the share price of betting and gaming specialist Evoke is persuading Greece's Bally's Intralot to place a contrarian bet," Mould said, noting the proposed valuation of around GBP225 million is far below the price Evoke paid for William Hill's international operations just a few years ago.

Evoke, formerly known as 888 Holdings, acquired those assets from Caesars Entertainment in 2022 in a deal valued at around GBP2 billion including debt. Mould said that transaction left the company with a "debt pile with which it has struggled ever since," with net liabilities of around GBP1.8 billion as of mid-2025.

The company has since faced a tougher operating environment, marked by intensifying competition, stricter gambling regulations, and higher taxes in key markets such as the UK.

Mould highlighted that changes introduced in the UK government's November 2025 budget are expected to significantly increase Evoke's tax burden.

Remote gaming duty has already risen to 40% from 21%, while a new online sports betting duty of 25% is due to take effect in April 2027.

Evoke previously said these changes could lift its annual duty bill by more than GBP125 million, adding further strain to earnings alongside higher interest costs.

"Those borrowings… have made it harder for Evoke to invest in its position and compete in a marketplace which gets tougher and tougher," Mould said.

The company's deteriorating outlook prompted a strategic review late last year, including the possibility of selling the entire group or parts of the business. It has also announced plans to close around 200 William Hill shops starting in May as part of cost-cutting efforts.

Despite the premium implied by Bally's proposal, the market response suggests investors remain unconvinced the deal will proceed on the current terms.

"The shares' failure to near the 50p bid price suggests investors have doubts about the Greek bid, or at least the limited cash portion of it," Mould said.

The structure of the offer appears to be a sticking point. All-share deals can be less attractive to shareholders seeking certainty, particularly when the bidder's own valuation or strategic direction is less familiar.

There is also lingering scepticism stemming from the sector's history of failed takeover attempts. Over the past decade, several high-profile bids in the UK betting industry have fallen through amid regulatory scrutiny and shifting market dynamics.

The potential acquisition also underscores how much the UK gambling landscape has changed.

The sector is now led by larger, more diversified operators such as Flutter Entertainment PLC and Entain PLC, alongside privately held firms like Bet365.

"If the deal goes through then ownership of one of British betting history's most storied names, William Hill, will change yet again," Mould noted. The brand has already passed through multiple owners since its founder's death in 1971 and would be on its ninth owner if the Bally's deal completes.

AJ Bell analysts also pointed to the broader context of rising takeover activity in UK equities. Mould said Evoke's situation is part of a wider trend, with 2026 already seeing a surge in dealmaking.

"Twenty firms on the UK stock market are already involved in bid discussions this year," he said, with total proposed deals valued at GBP29.3 billion so far, matching the full-year total for 2025.

This wave of activity suggests that buyers, including overseas bidders, continue to see value in UK-listed companies despite economic uncertainty.

However, Mould cautioned that not all announced deals reach completion, and Evoke's situation remains uncertain.

"There is no guarantee that the quintet without a firm offer price will close successfully," he said, adding that investors are unlikely to assume success until firmer terms are confirmed.

Evoke has struggled to regain momentum since the pandemic-era betting boom faded, with profit warnings in recent years reflecting weaker trading and structural pressures on the industry.

The Bally's approach offers a potential exit for shareholders at a premium, but also raises questions about long-term value and execution risk under new ownership.

By Eva Castanedo, Alliance News reporter

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