Bingo! Duke Street sets its sights on Mecca
THE private-equity firm Duke Street Capital has made an offer to buy Mecca, the beleaguered bingo operator, from Rank Group.
The buyout firm has written to Ian Burke, Rank's chief executive, with its proposal.
The offer is one of several that Rank, which also owns the Gros-venor casino chain, has received in the past few months. It reportedly rebuffed a proposal from Harrah's, the American casino company, to buy a stake in the business in exchange for its British casinos.
It is understood the Rank board is not keen to pursue a deal with Duke Street and the two sides are thought not to be holding talks. Both parties declined to comment.
Rank has been the subject of intense speculation in recent weeks following a downturn in trading at its bingo arm in the wake of the UK smoking ban.
Malaysian gaming group Genting picked up a 10% stake, fuelling gossip it could be interested in bidding, while property developer Richard-sons Capital has also built an interest. The shares closed at 90½p on Friday, valuing the business at £353m.
Other parties that could be interested in bidding for Rank include Aspers, a joint venture between Dam-ian Aspinall and the Australian tycoon James Packer, and Ladbrokes, the bookmaker.
One worry for potential bidders is that trading in the bingo business could weaken further. Duke Street has some experience of the gaming sector. Ten years ago, it backed a buyout of Ritz bingo, at a time when many people felt that the lottery would kill off the game. Ritz was later sold to Mecca's great rival Gala.
Earlier this month, Rank admitted that trade was so dire it had decided to scrap its full-year dividend and make cuts to ensure it stays within its banking covenants. The company paid a 4p-a-share final dividend last year, and passing on it for 2007 will save it £16m. It also plans to cut its capital spending plans for 2008 from £50m to £20m.
Burke said the group was not planning to close any of its 100 bingo clubs, even though a "handful" of them were losing money even before rent and rates.
Written by Matthew Goodman
