Gala Coral Group’s bingo club chain is starting to look like a Boondoggle, as casino industry news reports suggest Gala Bingo may be sold off to prepare for a flotation in a year’s time.
Perhaps the writing was on the wall after Gala Bingo’s Q3 financial losses made them feel like cadets Blankes and Copeland after walking into the Blue Oyster Bar.
Despite Gala Coral Group showing gross profits of £193.9m in its Q3 fiscal reports, it was largely down to the improving performances of Coral Interactive and Gala Interactive, as Gala Bingo blamed the great British weather as profits sunk £4.9m to £47.8m and earnings fall £3.1m to £11.9m.
Sky News leak news of a potential float
It was barely a few weeks ago that whispers floated out of Sky News that Gala Coral was preparing to slap on the lipstick, pucker up those lips and ask a series of investment banks for a smooch, and today the Times has picked up that story and run a little further with it.
Gala to quit the bingo hall business?
At its peak Gala Bingo owned 174 land-based bingo halls in the UK. Since 2007, that number has declined to around 144 clubs, but that still represents 21% of all land-based bingo halls in the UK.
It’s believed that the business has 5m bingo members, of which only 1.2m of them are active, and this number is declining. The 2012 accounts showed that Gala Bingo employed 4,801 staff, but cost reduction projects have shaved this number down in recent months.
The Times have reported that City sources suggest that Goldman Sachs head a list of potential candidates to carry out a strategic review of Gala Coral Groups’ business. That list is also believed to include Credit Suisse, Morgan Stanley, Deutsche Bank and Rothschild. Goldman’s happens to be one of Gala Corals biggest shareholders.
Once the strategic review has been completed it’s expected that the land-based bingo business will be exposed for the boondoggle it is, but not everyone shares that opinion with the Times suggesting that the group has already received interest over it’s bingo business worth an estimated £250-£300m.
Another alternative open to the group is to sell its less profitable bingo halls and put more intense focus on growing revenue in its best earners.
Boardroom shuffling
Another area the strategic review will be placing intense focus will be the boardroom. The Times report that the Chairman of the group, Rob Templeman has told colleagues that he does not want to chair a publicly listed Gala Coral after his experiences with Debenhams when they floated back in 2006.
Andy Hornby, chief executive of its bookmaking division, seems to be ruled out of the running to lead the publicly listed Gala Coral after his affiliation with the maligned HBOS Plc. debacle.
That leaves the groups CEO, Carl Leaver, who successfully oversaw the £179m Rank Group deal. It’s thought Leaver would step down after the sale of Gala Bingo, but the Times believes he may stay on at the head of the company as it goes through a flotation.
More news will follow as it emerges.
