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April 2012

Rank Aborts Gala Casinos Buyover Bid

by Renee Israel

Gala Casino Talks Fail

Talks to take over Gala Coral's casino business by the UK gambling giant, Rank Group have failed, it was reported this week.

Rank Group has pulled out of talks in a deal that would have been worth £250 million. 

If the bid had succeeded, the combined entity would have created the UK's largest operator of casinos in terms of the number of venues.

Rank operates 35 casinos in the UK market, while Gala Coral runs another 24. Combined, these casinos would surpass the 45 run by the Malaysian group, Genting UK.

However, the Chief Executive Officer of Rank, Ian Burke said that the group could not justify spending so much money in a move that would not have been beneficial to shareholders.

"Rank are committed to delivering a sustainable growth in shareholder value," he said. "The proposed terms of the potential acquisition did not achieve this objective."

Rank to Continue Expansion Plans

Despite the fact that the talks to buy over Gala Coral were aborted, the Rank Group said that it would continue to examine expansion plans.

"We will concentrate on delivering our organic growth plans, including the delivery of 12 more G casinos by 2015," said Burke.

Nevertheless, many have seen Rank aborting the Gala casinos bid as a disappointment, especially since Rank would have been able to broaden its reach in the UK gambling market quite significantly.

An analyst with Peel Hunt, Nick Batram said that it was undoubtedly disappointing that a price for Gala Casinos could not be agreed upon. "However, management has shown that they won't pursue corporate deals at any cost and shareholders should welcome this," he said.

For its part, Gala Coral issued a statement saying: "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 happy to continue to drive growth from our casinos."

Rank Group has around £30 million in net cash, while Galas Coral's casino business generated revenues of £134.4 million in 2011.

Rank said that had the deal gone through, it would have been funded with cash and debt.



Story Highlights »
  • Analysts disappointed that talks fall through.
  • Rank Group looking to expand in UK gambling market.


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