Caledonia, an investment trust company, will purchase 130 Gala Bingo clubs from the operator, while Gala Coral will retain ownership of both the Gala brand and the websites Galabingo.com and Galacasino.com.
Lorien Pilling, director of Global Betting and Gaming Consultants, told Gambling Insider the consultancy has found it difficult to work out why Caledonia has emerged as the planned buyer of Gala Bingo, but predicts that the reason for the acquisition may not be gambling related.
“We are very surprised as a consultancy,” he said. “It seems like a strange acquisition. We were trying to think of the rationale and why an investment company would want to pay quite so much for a chain of bingo clubs. It doesn’t seem like a property deal where you’re buying quite a number of buildings across the country. We think £241m is quite a lot for a sector of the gambling business that doesn’t immediately seem to be on the up.
“Caledonia is probably interested in it for its dividend. The purchase price was reflecting about a 4.3 multiple of EBITDA. I suppose it’s more of an investment decision rather than a practical business decision to get into gambling.”
Gala Coral and fellow operator Ladbrokes announced they had agreed the terms of a recommended merger in July, which is awaiting approval from the Competition and Markets Authority, and it was confirmed at that time of the announcement that the Gala land-based bingo clubs would not form part of the combined entity.
"We think £241m is quite a lot for a sector of the gambling business that doesn’t immediately seem to be on the up."Lorien Pilling
Pilling said: “You can’t do everything. I suppose it’s a continuation of the rationalisation just to focus on the betting sector. It’s probably quite a labour-intensive part of its business as well. You have to invest in the clubs to keep them going so when it’s looking to cut costs and become a streamlined operation with its new merger partner, then I suppose the bingo clubs don’t really fit into that strategy.”
The deal to sell the Gala Bingo retail division is subject to approval from the UK Gambling Commission (UKGC), which is expected to take up to two months.
A spokesperson for Gala Coral said to Gambling Insider that it is not able to estimate at this time when the sale of the Gala Bingo retail division will conclude following the potential UKGC approval.