Rank, Gala Takeover Bid Fuels Speculation

In a move that could change the face of the British casino industry gaming giant Rank, who own several Mecca bingo halls and Grosvenor casinos in the UK, announced a takeover bid for Gala Coral casino operations. If the deal is successful Gala will focus in its land based and online bingo operations.  Currently Gala Coral is run by creditors led by Apollo Global Management LLC. Rank is offering Gala 250 million pounds ($393 million USD at current exchange rates) for Gala’s 24 casino outlets. A report in the venerable Sunday Times indicated that the talks were at an advanced stage. The acquisition will accelerate Rank’s plans to have 45 Grosvenor casinos in operation by the end of 2015. Rank plans to roll out the company’s G Casino format which is designed to attract younger, less formal gamblers.

The sale will allow Gala Coral to concentrate in the firm’s bingo and bookmaking operations in the UK. Some say Rank’s new venture is risky and may be blocked by government regulators. Rank will become the UK’s largest casino operator but the deal will have to pass muster by the Competition Commission. If the deal is successful 105 of Britain’s 140 casinos will be run by one company. The Office of Fair Trading investigated all deals where the takeover target has an annual turnover of £70 million pounds or more. The Fair Trading Office refers cases to the Competition Commission. Last year Gala’s casinos took in £134.4 million and Rank’s Grosvenor casinos were even more profitable and made £238.6 million last year. The Office of Fair Trade said they will make no moves until a deal is announced.

Not everyone is pleased about the takeover. Analyst Daniel Stewart told reporters “If you have two operators controlling the market for the land-based casinos, that doesn’t make for a healthy market.” The first reports indicated that the deal may be done by February 9th but insiders say that most likely the deal will not be finished until the end of the month. Many analysts say that Gala has been ripe for a takeover since a debt restructuring deal in 2010 saw lenders left with Gala shares. At the time the deal fueled speculation that Rank would make a takeover move on Gala. Currently the Mecca bingo hall owner is backed by Malaysian billionaire Quek Leng Chan. Malaysian-owned Genting is the market leader and operates 46 gaming sites. The company was formerly known as Stanley Leisure.

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