Rank Not to Buy Gala The Deal is Off
Bingo and casino operator Rank has pulled out of talks to buy the casino operations of Gala Coral, a £250m deal that would have transformed the business into the UK’s biggest casino operator.
But following two months of discussions, Rank has terminated the discussions after failing to agree a price that would have been acceptable to its shareholders.
Adding the 24 casinos owned by debt-laden Gala Coral to the 35 already run by Rank, largely through its Grosvenor arm, would have seen Rank leapfrog market leader Genting, the Malaysian group that owns 45 casinos.
Rank intends to push on with its own expansion plans to open 15 “G”, or larger style, casinos by 2015.
James Hollins, analyst at Investec, described the decision as a “minor disappointment” but said Rank was “right to walk away”.
“The announcement of these talks was made on 30 January and we had projected completion of the deal at a sensible price given Gala Coral’s desire to raise funds for paying down its material gross debt of £2.1bn at September 2011,” Hollins said.
Private-equity owned Gala Coral also blamed the price for the breakdown in talks, sparked after an approach from Rank rather than because it had put the business up for sale. “Our casino business was not for sale when Rank made an unsolicited approach. Now that it is clear that a transaction on terms acceptable to our shareholders cannot be concluded, we are very happy to continue to drive growth from our casinos which are performing very strongly,” Gala Coral said.
“These discussions have now ended after the parties failed to reach an agreement that was in the best interests of our shareholders,” Gala Coral added.
Ian Burke, Rank’s chairman and chief executive, said it was “committed to delivering sustainable growth in shareholder value; the proposed terms of the potential acquisition did not achieve this objective”.
“We will now concentrate on delivering our organic growth plans, including the delivery of 12 more G casinos by 2015,” Burke said.
Rank, 74.5%-owned by Malaysia’s Guoco, has 35 casinos and 103 bingo halls in Britain.