by Renee Israel
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
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
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
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.