Predators circling ??1.7bn Rank - Saturday 12th of March 2005

BUYERS circling Rank are expected to swoop on the ??1.7bn leisure conglomerate as soon as it completes the sale of its video duplication arm later this year.


A number of cash-rich private equity funds have already sounded out Rank's advisers with buyout proposals. But chief executive Mike Smith is apparently unwilling to play ball.


Purchasers are said to be particularly interested in the Mecca bingo owner's gaming arm, which includes 34 casinos. Last year the division made ??115m of Rank's ??205m of operating profits. Rank is expected to be one of a small handful of beneficiaries of gambling reforms set to come into force later this year.


Private equity groups looking for a bargain are increasingly turning their attention to the leisure industry and away from the retail sector where a raft of High Street names have been taken private. 'Leisure has become the new retail,' said one private equity insider.

Smith's unwillingness to enter into negotiations owes much to his assertion that the group is doing very nicely under his stewardship. Over the past five years, the company's share price has risen by 45%.

But Smith has taken flak recently for his handling of the Deluxe saga. Eyebrows were raised last month when the Rank boss revealed plans to split the ??700m disposal of Deluxe into two tranches.

It is currently in talks to sell the media arm of the business, which makes DVDs and videos, but it still does not know whether it will sell off or separately list the film duplication operation.

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