Rank surrenders to £585m Guoco bid
Rank directors forced to accept 150p per share bid from Hong Kong investment group despite offer "substantially" undervaluing UK betting and gaming operator.
Rank has effectively admitted defeat in fighting off a £586m takeover by Hong Kong-based Guoco Group, yesterday advising shareholders to accept a final offer of 150p per share, despite the bid “substantially” undervaluing the UK betting and gaming group.
The group had, upon advice from Goldman Sachs, changed its recommendation to accept the offer, which represented less than a 1% premium on the share price when lodged on 6 May, because it could not guarantee Guoco would not cancel the listing if shares in public hands fell below 25%.
“This would significantly reduce the liquidity and marketability of Rank shares which have not been accepted into the offer and the value of any such Rank shares may be significantly adversely affected as a consequence,” Rank said in a statement to the London Stock Exchange.
The Mecca Bingo, GCasino and Blue Square operator had taken the decision despite Guoco announcing “its intention to maintain the listing of Rank’s shares”. The offer from Guoco, controlled by Malaysian billionaire Quek Leng Chan, closes at 1pm London time on 1 July.
The Hong Kong-based investment group’s All Global Investments Limited (AGIL) subsidiary this afternoon reiterated its intent to retain the listing. However, if the offer resulted in less than 25% of Rank remaining in public hands and UK regulator the Financial Services Authority advised this was no longer sufficient to support the listing, AGIL would then “explore with the FSA ways in which the necessary percentage of shares in public hands could be restored over a reasonable period of time [as defined under stock market rules] so far as commercially reasonable.”
AGIL announced two weeks ago that acceptances from shareholders representing 15.6% of Rank’s issued capital on top of its existing 40.8% shareholding had taken total acceptance of the offer over 50%. This triggered a mandatory cash offer valuing Rank at approximately £585m.
Rank yesterday unveiled a 7% year-on-year rise in sales for the second quarter with revenues from Rank Interactive up by 28%, following which Evolution Securities analyst James Hollins again urged shareholders to reject the 150p a share offer on the basis it “falls more than 20% short of our 185p price target.” The board also stated yesterday afternoon that it believed “this position is reinforced by the trading update announced today”.