Caledonia carves out Gala Bingo for £241m

JosУЉ Rojo
26 October 2015

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Listed GP Caledonia Investments has bought UK-headquartered Gala Bingo from PE-backed parent Gala Coral Group for ТЃ241m alongside the management team.

Pending approval by the UK's Gambling Commission, Caledonia will deploy £97.8m in cash in return for a 99.5% stake. Meanwhile, the management team, led by CEO Simon Wykes and CFO Alex Wood, is set to invest a further £500,000 to secure a minority interest in Gala Bingo.

The deal will see Caledonia take over a network of 130 bingo clubs across the UK. The establishments, which will continue operating under the Gala brand, reportedly represent a 38% share of the country's retail bingo segment.

The business will be carved out from parent Gala Coral Group, a betting and gaming business created in 2005 via the Arle-, Cinven- and Permira-backed £4bn merger of Coral Eurobet and Gala Group. In 2010, control was transferred by the firms to new owners Apollo, Cerberus, Park Square and York Capital, according to unquote" data.

The divestment of Gala Coral's bingo operations comes after the company's parent announced a £2.3bn merger with peer Ladbrokes. The plans, unveiled in July, could reportedly lead to the UK's largest gambling group, employing 30,000 people across a network of 4,000 stores.

Debt
Caledonia's acquisition was supported by a £155m senior debt package.

Company
Gala Bingo was created in 1991. The retail bingo operator has 130 facilities nationwide and a network of 1.1 million members. Headquartered in Nottingham, the business generates revenues via brands including Main Stage Bingo and Party Xtra. Gala Bingo's unaudited results included a £52.7m EBITDA and £33m in profits before tax in the year ending September 2015. The company employs a total of 4,000 professionals.

People
Caledonia's work on the deal was led by directors Charlie Edwards and Andy Powell, alongside investment manager Jayne Mould and investment executive Tarquin Wethered. Edwards will join Gala Bingo's board after the deal, as will director Sally Flanagan. Carl Leaver is CEO of Gala Coral Group. Simon Wykes and Alex Wood are Gala Bingo's CEO and CFO, respectively.

Advisers
Equity – Houlihan Lokey, George Fleet (Corporate finance); Osborne Clarke, Mark Spinner (Legal); Deloitte, Tim Haden (Tax).
Vendor – Ashurst (Legal); KPMG (Financial due diligence).
Management – Brown Jacobson (Legal).