Rank to be UK’s top casino firm after Gala deal
RANK Group has agreed to buy a string of casinos from rival firm Gala Coral just six weeks after walking away from initial negotiations.
The £205m cash deal will mean Rank becomes Great Britain’s largest casino operator, with its 35-strong Grosvenor brand enhanced by an additional 23 venues from Gala.
The discussions were publicised in January, but in March Rank ended talks over the then-£250m buyout saying it was not in the best interest of its shareholders.
At the time, Gala said its casinos had not been on the market, claiming Rank had made an unsolicited approach.
But the two gaming companies have now settled on a price that will see Rank’s Grosvenor brand extend into a further 11 cities with the help of a £175m bank facility.
Rank boss Ian Burke said: “This acquisition will deliver a steep change in Rank’s earnings by capitalising on our proven record of operational excellence in the British casino sector.”
He added that the deal, which includes licences to build three further casinos, will be earnings enhancing in the first full year of ownership.
The agreement is set to complete in September, subject to approval from Rank’s shareholders. But the gaming firm said it had an irrevocable undertaking to back the deal from Rank Assets Limited, a subsidiary of Malaysian Hong Leong that holds 74.5 per cent of the stock.
Gala Coral, which will receive £182.5m on completion of the deal followed by £22.5m in instalments over the next three years, said it “has not taken a final decision on the use of proceeds, although it expects to reduce the group’s leverage”.
Its chief executive Carl Leaver said: “The transaction will crystallise significant value for our shareholders and debt investors.”
Private equity-owned Gala Coral underwent a major debt restructuring in 2010 and had £1.3bn of net debt at the end of fiscal 2011.
ADVISERS RANK’S ACQUISITION OF GALA CORAL CASINOS
EDWARD BANKS
EVERCORE PARTNERS
Rank Group hired Evercore Partners to guide it through its negotiations with Gala Coral, with Edward Banks heading the team.
Banks, senior managing director of Evercore’s corporate advisory division, has under his belt five years as a City lawyer at Slaughter and May and a position on JP Morgan Cazenove’s mergers and acquisitions team.
The Oxford graduate is no stranger to Rank’s business, having taken Malaysian Guoco Group through its £500m purchase of a majority share in the gambling company last year.
Banks also advised Santander on its $16bn acquisition of Abbey National in 2004, O2 on its £18bn takeover by Telefonica in 2005 and Virgin Mobile on its $412.5m public offering five years ago.
More recently, the Evercore managing director took UTC through its $2bn acquisition of security services Chubb.
Chris Treneman at Investec is Rank’s corporate broker. The former barrister spent 20 years at Dresdner Kleinwort before moving to Investec three year ago, following Dresdner’s takeover by Commerzbank.
Deutsche Bank is advising Gala Coral through the deal with Rank Group.