Rank makes yet another U-turn on bid

Steve Dinneen
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IN YET another twist at gaming firm Rank Group, Ian Burke has been reappointed as chief executive less than a week after he quit over a takeover scrap with bidder Guoco.

The announcement coincided with a dizzying fourth U-turn in as many weeks on the firm’s advice to shareholders regarding Guoco’s bid for the company. The board has now reverted to its original advice to reject the 150p a share offer, which it maintains significantly undervalues the company.

The confusion is partly down to the unclear motives behind the Hong Kong-based gaming firm’s bid. The board argues that if Guoco takes control of more than 75 per cent of the company the remaining shareholders would be left with stock they could not trade.

The latest change of heart was brought about by a Guoco assurance yesterday that if it was to reach a level of 75 per cent on the closing offer closing date of 15 July, it would give the remaining shareholders a further seven days to sell their stock.

An open offer to shareholders at 150p a share received a higher than expected take-up, triggering a mandatory bid for the entire firm. Guoco expressed surprise that 15.6 per cent of shareholders accepted its offer. It already owned 41 per cent of the firm.

Burke has emerged from the crisis even more powerful than before, taking on the role of chairman in addition to his regular duties until the offer closes.

6 May 2011
Guoco raises its stake in Rank Group to 40.8 per cent, triggering a mandatory offer whenever a shareholder crosses 29.9 per cent. Rank board urges shareholders to reject the 150p a share bid.

8 June 2011
An unexpectedly high 15.6 per cent accept the offer, giving Guoco a controlling stake without paying a premium. The Rank board responds the next day with a strongly worded statement urging remaining shareholders not to accept the bid.

23 June 2011
Rank performs an astonishing U-turn by endorsing Guoco’s hostile bid, saying t he decision is based on the increasing possibility of Guoco taking control of 75 per cent of the firm, at which point it is entitled to delist from the stock exchange.
27 June 2011
The board once again changes its recommendation to investors, saying they should reject the offer if they are worried about the risk of Rank’s shares being delisted.

28 June 2011
Ian Burke, chief executive and Paddy Gallagher, finance director both quit as the firm flip-flops again, telling shareholders to accept the offer, citing the same reasons.

30 June 2011
The Takeover Panel grants shareholders a two-week reprieve to allow them more time to make sense of the situation.

4 July 2011
In perhaps the strangest twist in this bizarre tale, Ian Burke is reappointed as the board tells baffled investors to reject the offer after all. Burke cites Guoco’s new terms.