Rank Group Plc said shareholders should accept a final offer of 150 pence per share from Gouco Group Ltd., even as the Hong Kong investment company’s bid “substantially” undervalues the Mecca Bingo clubs operator.
Rank can’t guarantee Guoco won’t cancel its public listing, the Maidenhead, England-based company said in a statement on Regulatory News Service. Guoco has said it wouldn’t abandon the stock listing, yet it reserves the right to consider all options, Rank said.
Guoco, controlled by billionaire Quek Leng Chan, made an offer after the close of trading May 6 that was only an 0.8 percent premium to the share price. Yet if shares in public hands falls below 25 percent, Guoco is free to cancel Rank’s listing and stockholders “would own shares in an unlisted company controlled by Guoco Group,” Rank said.
“This would significantly reduce the liquidity and marketability of Rank shares which have not been accepted into the offer and the value of any such Rank shares may be significantly adversely affected as a consequence,” the company said in the statement.
Rank shares fell 0.5 percent to 149.8 pence at the 4:30 p.m. close in London. Since the May 6 offer, the stock hasn’t closed above 153 pence. Rank has increased 19 percent so far this year, giving it a market value of 585.1 million pounds ($936 million).
Rank said today’s trading update, in which it reported a 7 percent gain in sales in the 10 weeks ended June 19, reinforced its view that the offer doesn’t reflect its value.
Rank said it was acting on the advice of Goldman Sachs Group Inc. Rank’s board said today that its independent directors will accept Guoco’s offer.
Guoco’s offer closes at 1 p.m. London time on July 1. On June 8, it said it had acceptances from stockholders representing 56 percent of Rank.