Rank given partial green light on Gala Casinos acquisition
Competition Commission rules that operator can take over 19 of 23 casinos named in original proposition.
Rank Group has been given the green light to acquire 19 of Gala Coral’s land-based casinos, rather than the 23 initially proposed, following the publication of a report from the UK Competition Commission.
The London-listed company has also been given approval to take over three non-operating licences, subject to what it has described in a statement as “Appropriate remedy undertakings with the Competition Commission in relation to Rank’s non-operating licence in Edinburgh and the four casinos to be retained by Gala Coral.”
Gala Coral explained in a statement that it will retain its casinos in Aberdeen, Bristol, Cardiff and Teesside, while its Gibraltar casino was also excluded from the initial agreement. These properties are said by the operator to contribute around £4m of EBITDA per annum. Gala Coral’s online operations are also excluded from the agreement as are non-operating licences in Dundee and the City of Westminster.
On 12 May 2012 The Rank Group announced that it had conditionally agreed to acquire Gala Casinos from Gala Coral Group. The original conditional agreement would have seen Rank purchase 23 casinos and three non-operating casino licences, however the Office of Fair Trading referred the proposed deal to the Competition Commission for an in-depth merger review with the original agreement lapsing on 19 September 2012. The deal would see Rank overtake Genting as the largest casino operator in the United Kingdom.
Following the Competition Commission’s report today Rank said it was “pleased” to proceed with the purchase of 19 of the 23 casinos originally comprised within the proposed acquisition, while both Rank and Gala Coral said they were currently engaged in discussions over the amendments to a deal first agreed in May last year and approved by the former’s shareholders two months later. Rank said it would make a further announcement “shortly”.
Nick Batram, analyst with Peel Hunt, issued a ‘Buy’ recommendation on Rank Group shares, saying “We feel that there is enough substance in the deal that both parties to want to continue with the transaction. Strategically the acquisition of Gala Casinos is a compelling proposition for Rank.”
Shares in the operator are down 2.87% today at the time of writing.