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Rank enters talks to buy Stride Gaming

The prospective buyer is enacting the latest part of a three-year turnaround strategy
May 31, 2019

Casino operator Rank (RNK) has announced a £115m cash offer for online gaming group Stride Gaming (STR), just a couple of hours after confirming that the two were in advanced takeover talks. 

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Rank is offering Stride's shareholders 151p a share, which amounts to a 29 per cent premium to the target’s prior-day closing price of 118p on 30 May. Stride's directors will unanimously recommend the deal to shareholders, some of whom have already given the parties assurances that they will vote it through. Should the deal be accepted, Rank will acquire Stride’s entire share capital, which will accordingly delist from Aim.

Stride, which has over 11 per cent share of the online bingo-led casino market, has fielded a number of suitors since the announcement of a strategic review in February 2019. The UK-based outfit has been forced to reckon with a domestic market wracked by creeping regulation. The board has been concerned that “investor sentiment to Stride is likely to continue to be negatively impacted by these external pressures for some time”, according to chairman Nigel Payne. Stride's shares bottomed out at 83p in August 2018, having sat at around 230p only six months earlier. They have limped upwards since. 

For Rank, the acquisition would be the next chapter in a three-year transformation programme, and represent another foray into digital gambling. Rank completed its takeover of YoBingo in May 2018, which contributed to a 15.8 per cent increase in digital revenue to £70.4m at its first half in January. Chief executive John O’Reilly said that the Stride deal would offer “significant opportunities to create value when combined with the Rank brands, customer-base and infrastructure”. The offer is expected to complete in the third quarter of 2019.