Rank re-opens us$ 322.8 million casino deal talks with Gala Coral

A key stumbling block was the obligation to take on property leases relating to casinos no longer owned by Gala, though a disagreement over Gala Casinos’ pension liabilities had largely been resolved.

Any deal would propel Rank to the leading casino operator in Britain, with the combination of its Grosvenor Casinos 35-strong estate and Gala’s clubs overtaking the operation of Malaysia’s Genting.

Gala Coral, which has been through a torrid financial restructuring, was surprised talks broke down first time round, believing many of the issues were the sorts of risks around any deal. This suggests there could be a quick agreement if the two sides iron out some remaining issues over valuation – even though the Takeover Panel has not forced Rank to make any statement.

Carl Leaver, the Gala Coral CEO, is understood to believe that the business spanning casinos, bingo clubs and bookmaking will eventually be broken up. But he is not prepared to leave any value on the table while the group fixes its online operation, while any disposals are complicated by a largely private equity shareholder base, comprising 21 different firms.

Rank, which is now 74.5%-controlled by Malaysia’s Guoco Group following a farcical takeover last year, said last week that it had seen 5% like-for-like revenue growth for the 18 weeks to May 6. Total revenue rose 4%. On a like-for-like basis, sales at Grosvenor Casinos were up 6% over the period and Mecca Bingo flat, while the interactive business improved 17%.

Burke said the business was achieving “solid revenue growth despite a challenging trading environment”.

James Hollins, an analyst at Investec Securities, said the trading update dispelled “notions implied by the recent share price decline that the business improvement programme and underlying robust trading had evaporated”.

Neither Rank or Gala Coral would comment on the casino talks.