Rank Group has entered “advanced discussions” for an all-cash takeover of Stride Gaming this morning, after both parties confirmed that talks were taking place this morning following the publication of a Stride Gaming trading statement.
The new deal marks a consolidation of Rank’s shares in the bingo market, as it acquires one of the leading online bingo providers.
With the proposed deal being for 151p per share in Stride Gaming, up 23 per cent, bringing the value of the bingo-focused operator up to £114.44m. Shares in Stride stood at 117.5p at the close of trading yesterday, representing a market capitalisation of £89.07m.
Commenting on the offer, made through Rank subsidiary Rank BidCo, Nigel Payne, chairman of Stride, detailed: “Despite Stride’s strong market position, ownership of its own leading technology and excellent long term growth potential, the board recognises the scale of the mounting regulatory and fiscal pressures which the UK gaming sector is facing.
“It is also concerned that investor sentiment to Stride is likely to continue to be negatively impacted by these external pressures for some time.”
Payne went on to explain that Rank’s offer was one of many approaches “from a number of parties.”
Following the initial announcement from Stride, Rank published confirmation that talks were progressing. “The Rank Group notes the announcement made by Stride Gaming on 31 May 2019. Rank confirms that it is in advanced discussions with Stride in relation to a possible all cash offer for Stride at a price of 151 pence per share.
“There can be no certainty that an offer will be made or as to the terms on which any offer might be made,” the entertainment giant said.
Rank Group CEO John O’Reilly commented on the agreement: “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.”
Confirmation of a potential takeover followed earlier publication of Stride’s results for the six months to February 28, 2019. In the period, net gaming revenue fell 13 per cent, to £39.03m, with adjusted EBITDA also down markedly year on year, by 23 per cent, to £6.16m.
Adjusted net earnings dropped by a greater margin, down 29.3 per cent to £1.75m. Stride cited “regulatory headwinds across the UK online gaming market,” adding that no dividend would be forthcoming while the group’s strategic review of its business, which was announced in February.
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