Rank to buy Gala Casinos for £205m
The Rank Group is to buy the Gala Casinos business from the Gala Coral Group for £205m, making it the largest casino operator in the UK.
Rank’s acquisition will include 23 casinos in the UK along with three non-operating licences. Gala Coral’s casino in Dundee, which is under a compulsory purchase order from the local council, its Gibraltar gaming facility, its non-operating licence in Westminster, London, and all of its central management functions previously associated with Gala Casinos are not included.
Rank will overtake Genting UK to become the UK’s largest casino operator by number of casinos, with 58 venues and a further 13 non-operating licences. The rebranding of Gala casinos will see the company extend its reach into 11 new cities.
Ian Burke, Rank chairman and CEO, said in an investor conference call that he was “delighted” to confirm the company had agreed terms with Gala Coral.
“This represents a significant opportunity to deliver sustainable value to our shareholders through the development of the acquired casino portfolio, including the rollout of the Grosvenor brand across the Gala estate and the conversion of nine acquired casinos to the successful G format,” he said. “The acquisition, which remains conditional on shareholder approval and merger control clearance, will create the UK’s largest casino operator.”
Although he did not disclose any financial information relating to Gala’s casino estate, Burke said Rank’s “proven track record” and the “synergies arising from the deal” were expected to ensure that the acquisition will translate into improved earnings.
“This acquisition will deliver a step change in Rank’s earnings by capitalising on our proven record of operational excellence in the British casino sector and will be earnings enhancing in the first full year of ownership. By rolling out the G Casino format to the Gala estate and expanding the Grosvenor Casino brand in 11 new cities, we will accelerate the growing awareness of the brand and support the development of a multi-channel gaming business.”
It will not, he said, change the company’s previous plans to expand its casino portfolio with new properties over the next few years, but is viewed instead as complementary.
The transaction is expected to be completed in the third quarter of the year and remains subject to shareholder approval and clearance from the UK’s merger control authorities. This, explained, Burke, is likely to take around 40 working days once the company has formally submitted details of the proposed acquisition to the UK’s Office of Fair Trading.
Gala Coral said it had yet to make a final decision on what it will use the proceeds of the sale for but indicated that it would seek to reduce the group’s leverage.
“Gala Casinos has delivered outstanding results over the last year and I want to pay tribute to the leadership team headed by Mark Sergeant and all the people who work in the business,” said Gala Coral CEO Carl Leaver. “Under Rank’s ownership I am sure that the business will continue to go from strength to strength. This transaction will crystallise significant value for our shareholders and debt investors.”
The two parties first announced in January that they were in discussions over a possible acquisition. In March, however, Rank said that the deal on the table was not in the interests of its shareholders.
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