Rank Gala Deal May Face Regulatory Roadblock

Bingo news sources have been abuzz about the proposed Rank takeover of Gala Coral’s casino operations. Now it appears that Rank may face difficulties from government regulators in the UK. Rank has made a £250 million ($392 million USD) takeover bid to Gala Coral and if the bid is successful Rank will double its portfolio of casinos in the UK. Gala plans to focus on its bingo operations and its internet bingo operations. Rank, which operates Mecca bingo halls, is backed by Malaysian billionaire Quek Leng Chan. Rank’s plans will have to pass muster by the government’s Competition Commission. Rank and Gala are two of the three largest gambling companies in the UK. Malaysian owned Genting, which was formerly Stanley Leisure, is the current market leader with 46 gambling sites throughout Great Britain.

If the deal is successful it would mean that 105 out of the UK’s 140 casinos will be run by just one of two gaming companies. The Office of Fair Trading investigates all deals where the takeover target has a turnover of over £70 million and decides whether to refer the case to the Competition Commission. In 2011 Gala Coral’s casinos took in £134.4 million. Rank’s Grosvenor Casinos were even more profitable and brought in £238.6 million during 2010. The Office of Fair Trade said it will not investigate until a deal has been announced by both gaming companies. Analyst Daniel Stewart stated “If you have two operators controlling the market for the land-based casinos, that doesn’t make for a healthy market.” On January 29th Rank and Gala confirmed that they are engaged in talks but said that there was “no certainty” of an agreement between the two gaming giants.

Recent reports say that the deal could be accomplished by the time Rank releases the company’s interim results on February 9th. Inside sources say that most likely the deal will not be closed until the end of February. Rank released a statement which read “The terms of any such acquisition have not yet been finalised and there is no certainty that any transaction will occur.” The acquisition will speed up Rank’s plans to have 45 Grosvenor Casinos in operation by 2015. Rank is hoping that the company’s new G-Casino format will attract younger players. Currently Rank employs over 3,000 people at its casino and bingo operations. Mecca also has a prominent presence in the online bingo industry. Recently Rank’s shares closed 4.1p up trading at 131.1p.