Gala Coral Selling it's Bingo Halls
Thursday, 23 May 2013 | Written by Rachel Collins
It has been a tumultuous stretch of months for Gala Coral since the summer of 2012, starting with Rank Group offering to buy a number of the former’s UK land-based casinos. After being stonewalled by the UK Competition Commission, Gala Coral had to sell off a few of its casinos before the deal could finally be ratified. The purchase was then completed on 12 May and £175 million went to Gala Coral for the casinos. Having just completed a major sale, Gala Coral is again in a position where it will to make a significant divesture.
The Catalyst for Selling
Gala Bingo and Mecca Bingo are the two biggest brands in the UK for operating bingo halls, of that there is no doubt. Surprisingly, though, Gala Coral has reached the decision to sell its Gala Bingo halls. The catalyst that forced the group to reach the decision has been the controversy surrounding it. Gala Bingo has been the target of criticism within the industry for making its fixed odds betting machines more addictive. Another factor that brought about the decision has been the five per cent tax disparity between online and offline gambling operators.
Weathering the Storm
Furthermore, the group is drawing significant ire because of its present managing director, Andy Hornby. Speculation is still rife as to the extent of the role he played in the collapse of HBOS. Some organisations are reluctant to deal with Gala Coral while a huge cloud of doubt looms over the group. The sale of Gala’s bingo halls is hoped to relief some of the pressure being exerted on Gala Coral.
Stock Market Floatation
Andy Hornby is not expected to leave his position any time soon, so something had to give within the group. Gala Coral wanted to lessen the doubt and pressure because it plans to float on the London Stock Exchange and wants to minimise the potential for bad press. Floatation on the stock market is a major step for any business and it is important to eradicate any potential doubts. Stock value for Gala Coral could be significantly harmed if it were to make the transition amid concerning conditions. The sale of Gala Bingo would rid the group of the 20 per cent bingo tax and addiction criticism in one fell swoop. Expect mobilisation on the floatation front when Gala Coral gets round to selling Gala Bingo.
Fascinating Stories to Come
The coming situation is set to deliver some fascinating outcomes. For one, Gala Coral cannot now be expected to increase turnover for a third successive year. It is simple logic that this will be the case, based on the fact that the group will have less potential sources of revenue for the current financial year. The next interesting outcome will be the entity that actually purchases Gala Bingo. Rank can’t make an offer because it only just squeaked through the deal to acquire casinos from Gala Coral. Perhaps a foreign operator will step in to claim the halls.
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