Rank confirms Gala talks
Nottingham-based Gala Coral is in talks with Mecca bingo owner Rank to sell its casino division to the leisure giant.
A deal would mean Rank merging its 35 casinos from its Grosvenor chain with the 24 outlets owned by Gala, making it Britain's biggest operator.
A transaction could be worth £250m, according to reports in the Sunday Times.
"The Rank Group notes the recent speculation concerning Gala Casinos," the company told the Stock Exchange this morning (30 January).
"Rank confirms that it is in discussions with Gala Coral Group about a potential acquisition of Gala's casino business. The terms of any such acquisition have not yet been finalised and there is no certainty that any transaction will occur.
"A further announcement will be made in due course."
The acquisition of Gala's casino business would quicken Rank's aim to expand its Grosvenor operation.
It intends to grow the chain to 45 outlets by the end of 2015, it previously said.
The company, headed by chairman and chief executive Ian Burke, is also working on converting many of its Grosvenor casinos to the G Casino brand.
The group opened a new G Casino in Stockton-on-Tees late last year and plans to open two more in 2012 in Manchester and the Wirral.
"We plan to achieve a significant expansion of our land-based casinos business with the number of venues set to increase from 35 to 45 by the end of 2015," Rank said at the time of the half-year results in October.
"Of this number, 30 will be presented under the G Casino format – compared with 15 today."
Rank is majority-owned by Guoco, the investment vehicle of Quek Leng Chan, the Malaysian billionaire.
A sale of the casinos would allow Gala Coral, which last months revealed a net debt of £1.3bn, to concentrate on its bingo and bookmaking arms and strengthen its finances.
In the year to September it had sales of £1.1bn and generated earnings of £261m before interest, tax, depreciation, amortisation and exceptional items.
Rank announced a rise in revenue to £294m for the six months ended 30 June 2011, compared with £281.1m in 2010. Revenue from Grosvenor increased by 5.8 per cent to £123.4m for the six-month period.
