Gala Coral Owners In Talks Over Exit Jackpot
The owners of Gala Coral, one of Britain's biggest gaming and leisure groups, are in talks about preparing for an exit that could value the group at more than £2bn.
Sky News has learnt that the company's shareholders have approached a number of investment banks about a strategic review of the business that would kick off in the coming months.
The discussions raise the prospect of a flotation that - depending upon its valuation - could put Gala Coral on the cusp of the FTSE-100. And it could trigger an unlikely return to the stock market for Andy Hornby, the former chief executive of HBOS, who sits on the group's board as chief executive of the Coral chain.
Gala Coral is the UK's third-biggest high street bookmaker behind Ladbrokes and William Hill, and has a roughly 45% share of the bingo sector. It is also one of the biggest betting groups in Italy through its Eurobet brand, and like most of its peers has a fast-growing digital presence as consumers shift their spending online.
The strategic review is not yet underway, and bankers have not yet been formally engaged. However, people close to Gala Coral said the company's shareholders and management were in discussions with prospective advisers and were open-minded about the outcome of their review of the company's options.
That could include a separate sale of some or all of the company's divisions, or a flotation of the whole business, according to one insider. A stock market listing would make sense given the current appetite among investors to back high-quality company flotations.
The betting and gaming group was seized from its private equity shareholders just over three years ago as part of a £2.5bn debt restructuring deal which involved the hedge funds Apollo, Cerberus, Park Square and York Capital Management taking control.
The move represented a rare setback for a number of the buyout firms, including Cinven and Permira, which had previously owned Gala Coral.
Earlier this year, Gala Coral sold its casinos business, comprising 19 sites, to Rank Group in a move which made the acquirer the largest operator in the UK.
The transaction was part of a restructuring which has seen Gala Coral transform its financial performance during the last two years. In the 12 months to September 29, 2012, it recorded revenues of £1.19bn and generated earnings before interest, tax, depreciation and amortisation of £280m.
Gala Coral is chaired by Rob Templeman, the former boss of Debenhams, who also heads the private equity-owned RAC, the roadside recovery service. The company's chief executive is Carl Leaver, a former Marks & Spencer manager.
Mr Hornby has been with the leisure group for just over two years, having stepped down months earlier as the boss of Alliance Boots.
He left HBOS following its rescue by Lloyds Banking Group and may face mild criticism in a forthcoming probe into the bank's takeover by the City regulator. He has been repeatedly backed by Gala Coral colleagues during the HBOS furore and while he may opt not to remain on the company's board if it decided to pursue a public share offering, there is no suggestion that he would leave his post.
A Gala Coral spokesman declined to comment.