Just weeks after their merger talks appeared to go sour, Rank and Gala Coral Group have agreed on a deal that will see Rank become the largest casino operator in the United Kingdom with the purchase of Gala’s 23 casinos.
Rank, owner of Britain’s Mecca Bingo clubs and Grosvenor Casinos, will pay £205 million for Gala—£182.5 million in cash with the remainder to be paid in stages through August 2015 as unspecified conditions relating to taxation, pensions and other contingent liabilities are met. The merger is conditioned on approval by Rank’s shareholders and government clearance, and is expected to be completed in the third quarter. Rank will take out new three-year loans totaling £175 million to help finance the purchase.
Together with its existing 103 bingo halls and 35 casinos, Rank, led by Chairman and CEO Ian Burke and 74.5 percent owned by Malaysia-based, Hong Kong-listed Guoco Group, will become the country’s largest operator with 59 casinos and 13 non-operating licenses, overtaking rival Genting, also based in Malaysia and listed in Kuala Lumpur, which owns 46 U.K. casinos.
Gala, led by CEO Carl Leaver, has been owned since 2010 by former debt holders Apollo Global Management, Cerberus Capital Management, Park Square Capital Partners and York Capital Management, which took control from Permira, Cinven and Candover Partners in a debt-for-equity swap.
Gala’s 23 casinos and three non-operating licenses had revenue for the past 12 months of £125.9 million and EBITDA before rental and other costs of £25.7 million.
