Question Mark over Rank’s Takeover of Gala Casinos

Question Mark over Rank’s Takeover of Gala CasinosThere have been many twists and turns this year in the attempt by Rank to take over casinos belonging to the Gala Coral group. Along with the Genting group, Rank and Gala are the largest casino operators in the United Kingdom. In May 2012, Rank, which owns the Grosvenor casinos and Mecca Bingo, bought Gala’s twenty three land based casinos. This takeover by the Rank group was its second attempt this year to buy the Gala group’s casinos, earlier discussions on the proposed sale had broken down in March.In August, the Office of Fair Trading referred Rank’s takeover of Gala’s casinos to the Competition Commission. This was said to have been the result of concerns by the Office of Fair Trading that such a merger of two of the three largest casino operators in Britain would have an effect on competition in specific areas of the country and also at a national level. If the level of competition in the casino industry were to be reduced by the takeover by Rank, there would be a consequent effect on consumers. A take over of Gala’s twenty three land based casinos along with the thirty seven Grosvenor casinos which Rank already owns would make Rank the biggest casino operator in Britain. The company which is part of the Malaysian Guoco group also planned to initially buy licences to run three extra casinos.The Competition Commission has reviewed the referral from the Office of Fair Trading and has said that if the merger takes place and there are only two major casino operators in the United Kingdom that there are certain parts of the country where the lack of competition will have an effect on casino clients due to a lack of competition; these areas include Bristol, Cardiff, Liverpool, Stockton on Tees and Aberdeen.

There is the possibility that the Rank group may have to sell off some of its  casinos to reduce its impact on competition in the  casino industry. The talks between Rank and Gala did not reach a final outcome in September when the time for the takeover bid ran out. Both companies were said to have continued with talks after this so now it remains to be seen if the Competition Commission can find a solution to permit the merger to take place while keeping a certain level of competitiveness within the casino sector.

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