CSFB Private Equity is close to announcing the successful bidder for UK bingo and casino operator Gala, with Permira and a joint bid from Candover and Cinven thought to be neck-and-neck in the bidding.
CSFB Private Equity appointed Deutsche Bank and Credit Suisse First Boston to advise on exit strategies last summer, with a listing of the business the preferred option. However, the continuing absence of a new issues market has dampened the prospects of a listing.
According to The Times newspaper, Permira has made the highest offer of around £1.3bn while Candover and Cinven have lodged a bid of between £1.2bn and £1.3bn. Despite the higher price offered by Permira, the newspaper reports that the Candover/Cinven offer is still in the running because it is ‘more or less unconditional’, whereas the Permira offers includes ‘stringent conditions’. BC Partners was also among the earlier bidders, offering around £1.2bn for the business.
Candover’s and Cinven’s joint effort to buy Gala is further evidence that the two London-based houses are very comfortable doing business with each other. The two are currently bidding for Bertelsmann’s £650m scientific-publishing business. They also recently joined forces on a successful E600m acquisition of Kluwer Academic Publishers from Dutch parent Wolters Kluwer.
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.
Selling Gala for around £1.3bn 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. Being acquired by one of the financial investors would mark Gala’s third spell under private equity ownership.
The gaming and leisure market was an active area for private equity players in 2002, primarily the result of a relaxation of UK gambling laws. In August, 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.