Rank is discussing “appropriate amendments” to the terms of its proposed £205m acquisition of Gala Casinos, after it revealed the deal is set to expire at midnight due to regulatory delays.
The London-listed betting and gaming operator said the referral of the takeover to the Competition Commission by the Office of Fair Trading on 20 August 2012 had meant the deal “will not become unconditional by 19 September”, and would cease to be formally binding at midnight. Therefore Rank and Gala Coral were “continuing their discussions in relation to appropriate amendments to the Acquisition terms”.
Mecca Bingo and Grosvenor Casinos owner Rank’s planned £205m buy of 23 of Gala Coral’s casinos was referred to the UK competition body for a full investigation last month on the basis it could result in an “irreversible” loss of competition in the UK’s bricks ‘n’ mortar casino market.
The Competition Commission is due to deliver its verdict within 24 weeks, but can extend this deadline by a further eight weeks if it considers there are “special reasons” for doing so. Rank leaked a statement to the national press at the weekend suggesting that it could either walk away or, even if the deal was approved by the CC, reduce its offer because trading in Gala Casinos could worsen in the time it takes for the CC to reach its verdict.
Gala Casinos was the only part of the Gala Coral business not to deliver positive revenue growth in the last quarter, as the group reported overall earnings £64.2m in the period. However, the cost of servicing the company’s massive debt – £2.25bn – saw Gala Coral post an overall loss of £55.2m. The group is understood to wish to focus on its core Gala Bingo and Coral betting brands, and is nearing completion of migration of all its online properties onto Playtech-owned platforms.
Malaysian-owned Genting currently operates 44 bricks ‘n’ mortar casinos in the UK, while Rank’s cash acquisition of 23 casinos owned by Gala Coral, currently one of the three largest national casino owner-operators in the UK, would see Rank’s Grosvenor Casinos chain grow to 57 properties following the merger.