Gala Coral has cleared the path to its £2.3bn merger with Ladbrokes by selling its Gala Bingo division to investment trust Caledonia Investments for £241m.
The deal will include 130 clubs operated by Gala Bingo who boasts more than 1.1m active members.
It will not though include Gala Coral’s branded online bingo offering, galabingo.com. Gala’s merger with Ladbrokes is yet to be approved by regulators.
Jonathan Buxton, Partner and Head of Consumer at Cavendish Corporate Finance, said: “Caledonia’s acquisition of Gala Bingo from Gala Coral continues the gaming sector’s busy track record of M&A as providers seek to reinvent themselves in reaction to shifting consumer behaviour and onerous regulation. With Gala Coral retaining its branded online bingo business, the deal represents a rare bet on physical assets in a market which like so many others has been shifting online. For Gala this is a strategic move as the focus remains on its merger with Ladbrokes, which in spite of the loss of the Gala Bingo footprint will create a market leader in terms of high street presence with over 4,000 shops to rival William Hill’s 2,400. The next step for Gala/Ladbrokes is to consolidate the mobile business where it has been less competitive than others and must invest in order to capitalise on consumers’ migration to mobile platforms.”
Jane Anscombe, analyst at Edison Investment Research, added: “The long-awaited sale of Gala Bingo – first announced in June 2014 – has finally been completed with Caledonia Investments paying £241m for 130 bingo clubs. The EV/EBITDA of 4.6x, based on EBITDA of £52.7m for the year to Sep 2015, looks a good price for Caledonia given the business’ strong cash flows. But with Gala Coral keeping the successful online business Caledonia will need to work hard to manage the long-term downtrend in club admissions.”