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Rank Group prepares for Stride acquisition

The gambling company expects the deal to complete in the second quarter of its current financial year
Rank Group prepares for Stride acquisition

In all probability Rank (RNK) will be a larger entity by the time it reports its 2020 full-year results. It made a 151p per share cash bid for online gaming operator Stride Gaming (STR) in May, which has since been approved by an “overwhelming majority” of Stride shareholders. Rank chief executive John O’Reilly expects the deal to generate around £13.3m in synergies over the two years after it completes, with a similar cost of delivery. This includes bringing Stride’s proprietary technology in-house, as Rank currently outsources its digital platform. Other synergies will come from more scale in marketing, merging teams, and sharing central costs.

IC TIP: Hold at 154p

Mr O’Reilly, in footballese, called the year “a tale of two halves”, with a challenging opening giving way to a stronger second half. In December it introduced a new operating model for its Grosvenor venues, its largest division with sales of £353m or nearly half of group revenue, which generated around £8.2m in savings through better staff scheduling and reduced layers of management. Rank also rolled out the ‘Grosvenor One’ wallet in April, aimed at improving revenue growth by allowing customers to gamble and use promotions both in venues and online via the same wallet.

Consensus figures compiled by Bloomberg gives EPS of 151p for the year to June 2020, increasing to 159p in 2021.

RANK GROUP (RNK)   
ORD PRICE:154pMARKET VALUE:£ 600m
TOUCH:154-155p12-MONTH HIGH:184pLOW: 129p
DIVIDEND YIELD:5.0%PE RATIO:21
NET ASSET VALUE:102p*NET CASH:£1.8m
Year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201570174.515.15.60
201670985.519.16.50
201770779.716.17.30
201869146.79.27.45
201969534.67.17.65
% change+1-26-23+3
Ex-div:19 Sep   
Payment:29 Oct   
*Includes intangible assets of £448m or 115p per share