Rank in talks to acquire Gala casinos
Deal would see Rank become UK's largest casino operator with a total 59 venues across the UK
Rank Group is in talks to acquire Gala Coral’s land-based casino business, paying up to £250m for the 24 venues across the UK.
Should the deal go through, Rank would become the largest land-based casino operator in the country ahead of current leader Genting, which has 45 venues in the country. The group currently has 35 Grosvenor Casinos, and last year announced plans to expand the chain to 45 venues by 2015.
The Grosvenor chain is Rank’s most profitable division, with an operating profit of £20.2m for H1 2011, and was responsible for around 42% of the group’s total revenues for the six months. In November last year the Court of Justice of the European Union ruled that Rank was entitled to £253.4m from HM Revenue and Customs, related to overpaid VAT on bingo games between 1973 and 1996.
Gala Coral currently has a net debt of £1.3bn, posting a £537.8m fourth quarter loss in December last year. This follows a complicated restructuring to lower the group’s debt in 2010, after which chief executive Dominic Harrison “ now chairman of Microgaming’s Network Management Board “ stepped down.
He was replaced by former Marks and Spencer’s director Carl Leaver in November 2010, who has since brought in former HBOS CEO Andy Hornby as managing director of Coral, Ladbrokes veteran John O’Reilly as Coral’s MD of interactive, and former PartyGaming COO Per Widerström as MD of Gala Interactive to lead the group. The group then closed its Eurobet.com brand at the end of September last year.
Gala Coral is also in the process of moving its online operations to Gibraltar, and is in the process of applying for a betting and gaming licences for Gala Bingo, Gala Casino and Coral Interactive.
Simon French of Panmure Gordon retained his firm’s ‘Buy’ recommendation, describing the potential acquisition as “an excellent strategic move.” French added that with the lack of other buyers, he would be “surprised if the transaction did not happen “¦”
However, City AM report that the discussions are at an early stage, and an announcement before Rank’s interim results on 9 February is unlikely.