The Rank Group has finally been given the green light to proceed with their acquisition of Gala Casinos, subject to a caveat or five.
It was back in May 2012 that Rank declared its intention to procure the assets of 23 casinos, and three ‘cold’ licenses, belonging to the Gala Coral Group Limited. But it has been far from plain sailing as the Office of Fair Trading (OFT) referred the proposed acquisition to the Competition Commission (CC) over fears of an oligopoly being formed.
Currently, Rank, Gala and Genting make up the three biggest casino brand operators in the UK. The merger would leave just two of the big guns in the shape of Rank and Genting and it was this glimpse into the future that made the CC apply the brakes.
But it now seems those brakes have been released and the merger has started to roll once more. The CC has announced that a merger of the two companies could damage competition in five crucial areas in the UK: Aberdeen, Edinburgh, Stockton-On-Tees, Bristol and Cardiff. The proposition is simple: the casinos in these affected areas cannot be involved in the merger and must stand alone as Gala Casinos. In terms of Edinburgh, Rank would be forced to sell its ‘cold’ license to a different buyer. Cold licenses allow casino operators to open casinos where currently none exist.
‘We think that removing the casinos in problem areas from the deal and requiring Rank to sell the Edinburgh cold license to an upfront buyer will protect the interests of customers. The excluded casinos are all profitable and so we believe that they will continue to act as viable competitors to Rank in these areas.’ Martin Cave, Chairman of the merger inquiry group, and CC Deputy Chairman told StockmarketWire.com.
At least both Rank and Gala know where they stand, and what they have to do to move forward with their proposed merger. The intervention of the CC is great news for the average customer. Variety creates competition and competition provides value for the customer. The old adage two is company and three is a crowd is certainly not prevalent for the customers of the UK land-based casinos.
