Rank (LON:RNK) announces that it has conditionally agreed to acquire Gala Casinos from Gala Coral Group Limited (“Gala Coral Group”) for a total cash consideration of £205 million (the “Acquisition”).
The Acquisition includes 23 casinos in Great Britain and three non-operating licences. Gala Coral Group’s casinos in Dundee and Gibraltar, its non-operating licence for the City of Westminster (London) and all of the central management functions previously associated with Gala Casinos are not included in the scope of the Acquisition.
The Acquisition presents a significant opportunity for Rank to continue to deliver sustainable value to shareholders through the development of its successful casino portfolio:
- Creates the largest casino operator in Great Britain by number of casinos with 58 operating venues and 13 non-operating licences
- Strongly positioned to capture the long-term growth opportunities presented by the British casino sector
- Significant opportunity to deploy Rank’s proven management expertise across an enlarged portfolio
- Accelerates Rank’s programme of estate expansion in Grosvenor Casinos
- Rebranding of Gala casinos extends Grosvenor brand into 11 new cities
- Roll-out of the proven ‘G Casino’ format to nine Gala casino locations. The ‘G Casino’ roll-out has historically generated over 20% year two cash on cash returns
- Expected to be earnings enhancing for Rank in the first full financial year of ownership
Rank intends to finance the Acquisition along with its related costs and expenses with new three-year bank facilities totalling £175 million together with existing bank facilities.
Commenting on the transaction, Ian Burke, chairman and chief executive officer of Rank said:
“We are delighted to have agreed terms with Gala Coral. 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 into the Gala estate and expanding the Grosvenor Casino brand into 11 new cities, we will accelerate the growing awareness of the brand and support the development of a multi-channel gaming business.”
The Acquisition, which is expected to be completed in the third quarter of calendar 2012, is conditional upon the approval of Rank shareholders and receipt of UK merger control clearance.
A circular including details of the Acquisition and containing notice of a general meeting of the Company (the “General Meeting”) (at which a resolution seeking Rank shareholder approval for the Acquisition will be proposed), will be despatched to shareholders as soon as practicable (the “Circular”).
Rank has received an irrevocable undertaking from its majority shareholder, Rank Assets Limited (a wholly-owned subsidiary of Guoco Group Limited), to vote in favour of the resolution to be proposed at the General Meeting.
Evercore Partners is acting as sponsor and financial adviser to Rank in relation to the Acquisition. Investec is acting as corporate broker to Rank.
A conference call for investors and analysts will be held at 08.30am (London time) on Monday, 14 May 2012. Dial-in information follows below:
A presentation for analysts and investors will be held when the Circular is posted. There will be a simultaneous webcast of the meeting. Further details will be provided in due course.