RANK Group yesterday confirmed it is “in discussions” with Gala Coral Group about a potential £250m acquisition of Gala’s casinos business.
The terms of any acquisition have not yet been finalised, stated Rank, and there is no certainty that any transaction will occur. A spokesperson for Rank declined to confirm when talks between the parties first started, and said an announcement at Rank’s interim results next Thursday would be “unlikely”.
A takeover is seen as a logical step for the FTSE 250 operator, which was pursuing a strategy of organic growth for its Grosvenor Casinos chain before news of the deal broke, with a target to expand its 35 venues to 45 by 2015.
Rank had about £55m of net cash on its balance sheets at the end of December, giving it headroom to raise funds to acquire Gala’s 24 venues, which would make it the largest casino operator in the UK.
A source close to Rank said: “Grosvenor and Rank have said for some time they are interested in casino assets in the UK at the right price.”
Panmure Gordon analyst Simon French, meanwhile, described the deal as “an excellent strategic move”. “With no obvious buyer for these assets, we would be surprised if the transaction did not happen.”
Shares in Rank rose 4.1p to 131.1p yesterday.