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Rank may have to sell casinos for Gala deal

Last updated: 08:34 18 Dec 2012 GMT, First published: 09:34 18 Dec 2012 GMT

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Bingo and gaming group Rank (LON:RNK) has been told it may have to sell six of its casinos in order to complete the acquisition of rival Gala.

Rank and Gala, two of the three UK national casino operators, are in discussions over a merger of their outlets, but the Competition Commission today said in a provisional ruling this could lead to consumer issues in a number of areas.

The potential areas of conflict, said the Commission, were Aberdeen, Liverpool/New Brighton, Stockton-on-Tees, Bristol, Cardiff and Edinburgh.

It added that the casinos compete mainly at a local level for customers, particularly on elements such as customer service and promotions.

One possible remedy, it said, was for Rank to find buyers for casinos in the five areas identified as well as for Edinburgh where there is not a casino in operation but a right to operate one.

In May, Rank announced a deal to acquire from Gala 23 casinos and three 'cold' licences (where the operator holds the right to operate a casino but does not operate there yet.)

Broker Daniel Stewart said it understands the Commission will publish its final report by 20 February and in the interim has invited interested parties to respond by 11 January 2013.

The broker expects Rank to end up with the majority of the Gala Casinos and has the opportunity to convert some of the Gala venues into G-format casinos, which it says yield higher returns.

Daniel Stewart has a hold recommendation and 140p price target.

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