Bass sells bingo business for pounds 279m

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The Independent Online
Bass continued the process of slimming down to its main hotel and brewing operations yesterday when it sold Gala, the bingo business, to a management buy-in team for pounds 279m in cash. The move ends months of speculation about the future of the 130 bingo halls, while raising investors' expectations that Bass is about to launch a large acquisition or share buy-back.

Analysts said the price tag, which includes pounds 43m of cash balances in Gala, was slightly disappointing. "If they had made up their mind to sell last year they could have got more for it," said one. Like the rest of the bingo industry, Gala's profits have come under pressure from the National Lottery. In the year to last September Gala made operating profits of pounds 24m. Bass shares fell 8p to 895p.

The deal will almost halve Bass's net borrowings, which stood at pounds 550m at the end of September. Analysts calculate that the group can now afford to spend more than pounds 2bn on acquisitions or returning cash to shareholders.

Bass refused to be drawn on how it would use the cash. But industry observers believe that the group would prefer to make acquisitions.

"Bass' management are fairly sure they can spend the money more wisely than their shareholders can," one commented. However, he added that if the group had not identified a suitable target by the end of 1998 it would come under pressure to return the cash to shareholders.