Rank Group Plc, the operator of Mecca Bingo clubs, changed its stand on Guoco Group Ltd.’s bid, recommending that shareholders who aren’t worried about the Hong Kong investment company canceling Rank’s stock listing should reject the offer.
On June 23, Rank said its board advised shareholders to accept a final offer of 150 pence per share from Guoco, even though it undervalued Rank. That advice holds if stockholders are worried Guoco will cancel the listing, yet doesn’t apply if they aren’t concerned, Maidenhead, England-based Rank said in a Regulatory News Service statement today.
Guoco, controlled by billionaire Quek Leng Chan, made a bid May 6 that was only a 0.8 percent premium to the share price. Today the board said Guoco’s June 24 announcement that it had no plans to cancel Rank’s listing voluntarily “does not provide the board with certainty” the listing will go ahead if Guoco decides continuing it is “not commercially feasible.”
“You could say they’re saying you should make up your own mind,” said Jeffrey Harwood, an analyst with Oriel Securities who has a “buy” recommendation on Rank.
Rank said today Guoco wouldn’t supply an “unconditional commitment” to continue the listing, or to guarantee shareholders an 18-month period for Rank shareholders to sell out at a minimum of 150 pence per share, following a termination. Goldman Sachs Group Inc. is advising Rank.
Rank was little changed at 149.9 pence at the 4:30 p.m. close in London. The shares have gained 19 percent this year, giving it a market value of 585.5 million pounds ($935 million).
Guoco said June 24 that it owned shares or had acceptances from holders representing about 57 percent of Rank. Its offer closes 1 p.m. July 1.
The U.K.’s Office of Fair Trade said today it wouldn’t refer the proposed merger to the Competition Commission.