Rank Group makes £115.3m offer to acquire Stride Gaming
The Rank Group has reached an agreement on an all cash offer to acquire Stride Gaming, paying 151 pence per share for the business.
The Mecca Bingo and Grosvenor Casino operator's offer values Stride's entire fully diluted share capital at £115.3m. It represents a 29% premium on Stride's share price of 119 pence per share on May 30, the last business day prior to the offer, and a 48% premium on the six month average price per Stride share of 102 pence to February 8, 2019.
The announcement came just minutes after Rank confirmed it was in talks with the bingo and casino operator.
"We are pleased to make this offer for Stride, which is a very complementary business to Rank," Rank Group chief executive John O'Reilly said. "We have long been impressed with the quality of the Stride management, technology and operations, which, we believe, offer significant opportunities to create value when combined with the Rank brands, customer-base and infrastructure.
"The joining of our businesses will accelerate delivery of Rank's transformation plan and create one of the UK's leading online gaming businesses."
Should the deal go through, Rank said it would create a business with genuine scale and capability in the digital market, with pro forma digital net gaming revenues of approximately £185m (€209.5m/$233.5m).
Rank also expects the acquisition to improve its performance and reduce costs through migration to Stride’s proprietary technology platform and in-house ecosystem, as well as enhance its management team with the addition of senior staff from Stride.
In addition, Rank said that the deal would create significant value from strong synergies and offer greater financial flexibility to the combined business.
Post-acquisition, the new, expanded digital division would be led by Stride's Eitan Boyd and Darren Sims, currently chief executive and chief operating officer respectively, who would also oversee the migration of Rank's online assets to the new proprietary platform.
Founded in 2012, Stride Gaming is the operator behind casino brands including Aspers Casino, Lucky VIP Casino, Regal Wins Casino and Spin and Win, as well as online bingo sites Kitty Bingo, Lucky Pants Bingo and Bingo Extra. The London-listed business announced in February this year that it had launched a strategic review of the business that it said may culminate in a sale.
Stride chairman Nigel Payne said that despite its leading market position, propretiary technology and long-term growth potential, the business was facing mounting regulatory and financial pressures in the UK gaming market. This, Payne noted, would negatively impact investor confidence in the business.
"Following the announcement of Stride's strategic review in February 2019, Stride had approaches from a number of parties, in addition to Rank," he said. "After extensive discussions, the board concluded that a combination with Rank has significant strategic logic and its offer of 151 pence per share represents fair value for Stride shareholders in the current environment. Accordingly the board of Stride is unanimously recommending Stride shareholders to vote in favour of the offer."
The two operators have previous business links, with Rank having acquired QSB Gaming Limited, owner of Spanish digital bingo business YoBingo.es, in May of last year.
Stride held a 24.2% stake in QSB and recently confirmed a special dividend of 8 pence per share relating to the earn-out agreement associated with Rank’s acquisition. This dividend is due to be paid next month.