Rank Group in “advanced talks” to acquire Stride Gaming for £115m
Mecca Bingo-owner launches offer bid of 151p per share for rival UK bingo operator
Rank Group today confirmed it is in “advanced talks” to acquire UK online bingo and social gaming operator Stride Gaming for £114.5m.
The Mecca Bingo-owner lodged an all cash offer for the Stride Gaming business at a price of 151p per share.
Stride’s share price at opening of the markets rose 23% following the news, with shares trading at 144p per share at the time of writing.
The offer follows Stride Gaming’s board of directors conducting a “strategic review” of the business, first announced earlier this year, as part of a drive to “maximise value” for its existing shareholders.
In April, Stride Gaming warned its investors to expect financial results for the six months ending 28 February to be 5% lower than initial expectations, citing “fiscal and regulatory changes” implemented in H2 2018.
Stride Gaming operates over 150 sites, representing more 25% of the brands in the UK bingo market, with a market share of 11%. This is expected to increase to 18% following the merger.
Rank said the takeover would create “significant value from cost synergies”, citing estimated pre-tax recurring annual cost savings of £13m by the third year after completion and “genuine digital scale” with pro forma digital revenue of the combined business estimated to be approximately £185m.
The Mecca-operator said the takeover would improve Rank’s performance and reduce costs by migrating to Stride’s proprietary technology platform and in-house ecosystem by Q3 2019.
As part of the potential deal, Stride Gaming CEO Eitan Boyd and COO Darren Sims, would lead the digital operations of the combined business and be responsible for implementing the technology migration.
Nigel Payne, Stride Gaming chair, cited “mounting regulatory and fiscal pressures” in the UK gaming sector as being the reason for the sale, adding that these pressures would continue to negatively impact investor sentiment.
Rank Group CEO John O’Reilly said he was impressed with Stride’s management team, technology and operations, adding that these would offer “significant opportunities” to create value when combined with Rank’s existing brands, including Mecca and YoBingo
“The joining of our businesses will accelerate delivery of Rank’s Transformation Plan and create one of the UK’s leading online gaming businesses.” O’Reilly added.
In its latest Q1 2019 trading update, Rank Group revealed a 2% year-on-year rise in its digital gross gaming revenues for the period, with its business revenues remaining largely flat.
Digital GGR from its Grosvenor business grew by 6% during the quarter, with net gaming revenues up 15% due to more efficient bonusing. Net gaming revenues from its Mecca business grew by 10% during Q1, with the operator citing good performance in its YoBingo! brand.