Tim Human’s monthly M&A column
Rank, the UK leisure group, says in its corporate literature it has been entertaining people since 1937. That tradition has extended into the corporate realm in recent weeks, as Rank’s board performed a series of U-turns in its response to a takeover offer from Guoco, an investment company run by Malaysian billionaire Quek Leng Chan.
At last count, Rank had changed its mind about the deal no fewer than six times. While all this flip-flopping was going on, the company’s CEO also resigned, only to rejoin the company a week later.
The sorry saga began back in May when Guoco, which already held 29 percent of Rank, bought a further 11.6 percent from Genting, another Malaysian investment vehicle, taking its stake to 41 percent. This triggered a mandatory takeover offer for the whole company at 150p a share. Rank’s board advised shareholders to reject the bid, saying it substantially undervalued the firm.
That resolve slipped away in June, when Guoco said it had received acceptances from an additional 15 percent of shareholders, taking its holding to 56 percent. Rank then decided to do nothing while it considered its next step.
When Guoco announced its offer would close on July 1, that prompted Rank to tell shareholders to accept. If Guoco ended up with more than 75 percent of the shares, the leisure group warned, it might de-list the company.
As if matters weren’t confusing enough, Rank then began recommending different things to different shareholders. After Guoco reiterated its desire to keep the listing but would not fully rule out de-listing, Rank advised shareholders worried about a de-listing to sell, but said those unworried about it should reject the offer. Yes, this really happened.
Shareholders might have just stopped paying attention by this point – but Rank had more surprises up its sleeve. Just two days later CEO Ian Burke and finance director Paddy Gallagher quit. Oh, and Rank changed its recommendation again, this time to accept.
The next missive from Rank came a week later, when it reinstated Burke as CEO and said he would become chairman after the offer closed. At this time, Guoco offered new protections for minority shareholders, so Rank changed its recommendation again – to reject! Only a leisure group could provide so much entertainment.
This article appeared in the August print edition of IR magazine.
