Takeovers and Mergers - A Casino Gamble?

Hot on the heels of the Vue takeover of Apollo Cinema Group, here is another significant takeover in the UK leisure sector. This one will certainly attract the attention of the competition regulators. Two of the UK’s largest operators of casinos are being brought together as Rank buys Gala Coral’s casino business for £205m.

If the takeover is successful (i.e. approved by Rank’s shareholders and also passed by the competition regulators), then the deal will mean that Rank would overtake Genting as the biggest casino operator in the UK. So the main motive for the deal is clear - market leadership.

According to analysts quoted in the Financial Times:

“Rank has ambitions to increase the demographic profile of UK casinos by moving them away from the pure gambling offer to venues offering broader entertainment. Analysts are broadly supportive of the merger, saying there were clear synergies and potential for investment.”

So Rank has invested millions in a bid for casino leadership. Is it a gamble?