If successful, the three-way deal will bring together one of the leading online gambling players, Britain's top casino and bingo hall operator and the country's biggest high street bookmaker.
"The Consortium sees significant industrial logic in the combination, through consolidation of their complementary online and land-based operations, delivery of substantial revenue and cost synergies and from the anticipated benefits of economies of scale," 888 and Rank said in a joint statement.
The companies added that no formal approach had yet been made to William Hill's board.
"Accordingly, there can be no certainty that any transaction will ultimately take place, nor as to the terms on which any such transaction might be constituted."
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
The Sunday Times earlier reported that Rank was in talks with 888 about creating a 2 billion pounds gambling group, potentially with the aim of launching a 3 billion pound bid for William Hill.
A spokesman for Rank declined to comment on whether the groups would pursue a merger if their consortium failed to land William Hill.
Under British takeover rules, the companies have until August 21 to make a firm offer or else walk away.
THREE-WAY BET
A three way tie-up would be the latest, and potentially biggest, major deal in an industry consolidating in the face of tighter regulations and rising taxes.
William Hill was quick to embrace Britons' changing gambling habits, such as placing bets online using smartphones and tablets, 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 high street, providing betting on traditional horse and greyhound racing, and gaming on machines.
The company made an early attempt to consolidate with a 720 million pound bid for 888 last year, but it could not agree on price with major 888 shareholder, Israel's Avi Shaked. Avi and his brother Aaron Shaked own about half of 888 through family trusts, according to Thomson Reuters data.
The brothers have built one of Britain's biggest online gambling groups, offering sports betting as well online bingo and casino games. Rank, meanwhile, is Britain's biggest operator of bingo halls and casinos.
Since William Hill's failed bid, rivals Ladbrokes and Gala Coral have agreed a 2.3 billion pound deal, which will knock 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 it was jilted in favour of a GVC Holdings.
Frustrated at the poor online performance, William Hill's board sacked chief executive James Henderson on Thursday after only two years.
Shares in William Hill had declined 31 percent in the 12 months before Henderson was sacked, hitting a three-year low in June 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 has slipped 3 percent, making it worth about 935 million pounds.
A spokesman for William Hill said the company would comment in due course.
(Editing by Raissa Kasolowsky and Clelia Oziel)
