Gaming and betting services company Rank Group Plc (RNK.L) on Monday said it has conditionally agreed to acquire Gala Casinos from Gala Coral Group Limited for a total cash consideration of 205 million pounds.
The purchase 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 the central management functions previously associated with Gala Casinos are not included in the deal.
The transaction is expected to be completed in the third quarter of calendar 2012. The deal is expected to be earnings accretive for Rank in the first full financial year of ownership.
Rank said the deal would create the largest casino operator in Great Britain by number of casinos. There will be 58 operating venues and 13 non-operating licences.
Also, the purchase will position the company strongly to capture the long-term growth opportunities presented by the casino sector in the U.K.
The deal will also accelerate Rank's program of estate expansion in Grosvenor Casinos. Rebranding of Gala casinos will extend Grosvenor brand into 11 new cities.
The deal will also see the roll-out of the 'G Casino' format to nine Gala casino locations. The 'G Casino' roll-out has historically generated over 20 percent year two cash on cash returns.
Rank plans to finance the acquisition with its bank facilities, including the new three-year bank facilities totalling 175 million pounds.
Rank has received an irrevocable undertaking from its majority shareholder, Rank Assets Limited, a wholly-owned subsidiary of Guoco Group Limited, to vote in favor 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 deal while Investec is its corporate broker.
RNK.L is currently trading at 116.22 pence, down 0.48 pence or 0.41 percent, on 16,145 shares.
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