Gala Coral Group May Give in to American Investors

Gala Coral Group is a victim of the latest round of changes in the world of Bingo in the U.K. Between the Gambling Act 2005 and the Smoking Ban land based bingo halls are taking a beating and efforts to keep the bingo player coming out are failing, creating a serious problem when there is a building to maintain and a staff to pay. Gala Coral Group has been looking at the online aspect of the bingo business but has not moved fast enough to capitalize on the trend. Online bingo is showing the most rapid growth in the online gambling industry. Taxation is a big issue which is crippling the land based bingo operators. The recent hike in GPT by 46% and the removal of VAT has caused much controversy in the U.K. parliament, considering the fact that land based bingo is the softest form of gambling but is now the highest taxed.

Gala Coral Group staved off a hostile take over bid by Harrahs Entertainment the large American gambling operation about four years ago. Now Gala is again looking for an influx of cash to keep their heads above water and are again being looked at by an American investment company. Blackstone Group has made a bid of £300m (€332.56m) in return for a 40 to 60 per cent stake, in the Gala Coral Group operation. According to rumours in the financial world there are eight other private equity firms looking at Gala assets.

Blackstone is a leading global alternative asset manager and provider of financial advisory services listed on the New York Stock Exchange. Total fee earnings assets under Blackstone's management was $96.3 billion as of September 30, 2009. Services by Blackstone include the management of corporate private equity funds, real estate funds, hedge funds, funds of funds, debt funds, separately managed accounts, collateralized loan obligation vehicles and closed-end mutual funds. If accepted, Blackstone’s bid would disrupt an agreement drawn up between Gala’s junior lenders and its current private equity owners, Cinven, Permira and Candover. The agreement was intended to keep the company’s gaming and bingo divisions together. This bid for control may not transpire and Gala Coral will remain out of American hands for a while longer.