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CSFB close to £1.2bn Gala sale

European buyout firm BC Partners is in negotiations to acquire the UK casino operator, providing the bank with a strong return on its original investment.

UK casino and bingo hall business Gala is the subject of a £1.2bn bid from European private equity-backed buyout from BC Partners, marking what is likely to be the latest in a series of secondary acquisitions by private equity firms in Europe.

 

A £1.2bn offer would provide CSFB with a healthy exit on the £400m it paid to a consortium of private equity investors including PPM Ventures, the private equity arm of Prudential, to acquire the business in 2000, and would mark the Gala’s third spell under private equity ownership.

 

CSFB Private Equity appointed Deutsche Bank and Credit Suisse First Boston to advise on a possible stock market flotation over the summer, following Cinven and CVC Partners’ successful listing of UK bookmaker William Hill in June. According to a report in The Times, a number of buyout firms expressed an interest in acquiring the business, including a joint offer from UK firms CVC and Candover. Final offers for the business are to be submitted by today’s deadline.

 

Gala is one of the fastest growing retail gaming businesses in the UK, with an annual turnover of £395m, an increase of just under £200m in three years. The company employs over 10,000 employees and runs 166 bingo clubs across the UK. In 2000, Gala acquired Ladbrokes Casinos, one of the UK's largest casino operators, with 28 casinos across the UK, Isle of Man and Gibraltar.

 

The gaming and leisure market has been an active area for private equity players in 2002, primarily the result of a relaxation of UK gambling laws. Earlier this year, Charterhouse acquired Coral Eurobet for £1.4bn, beating off competition from rival private equity firms BC Partners and Candover, and trade buyers Gala and Rank. Yesterday it was announced that London Clubs International is likely to be the subject of a joint offer from Stanley Leisure and Hg Capital.

 

The deal also reflects the emergence of ‘tertiary buyouts’ in private equity investment. Last week Dutch mobility aids manufacturer Welzorg was acquired from UBS Capital by Swedish private equity firm Industri Kapital. The business had previously been owned by a consortium comprising Holland-based private equity firms Parcom Ventures, Alpinvest and Residentie Participaties.