Rank in Ladbrokes flutter

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Rank, the dismembered leisure group, wants a high-street bookmaker and has put Ladbrokes top of its target list

Rank, the dismembered leisure group, wants a high-street bookmaker and has put Ladbrokes top of its target list

Chief executive Mike Smith, who used to run Ladbrokes gaming arm, has identified buying a bookmaker as the cornerstone of his new strategy.

David Michels, his opposite number at Hilton, owner of Ladbrokes, is understood to be ready to entertain offers for the betting business.

Hilton is already in talks with bingo chain Gala on the sale of its casinos. But it is thought Gala is unwilling to pay the likely asking price of £250m.

The only stumbling block for an acquisition of Ladbrokes may be its size: it is probably the most expensive bookmaker, worth some £1.5bn.

But another possible target for Rank is Corals, the rival bookmaker owned by Deutsche Morgan Grenfell's private equity arm. Corals is thought to have put on ice a stock market float, and its owners would welcome an exit via a trade sale. William Hill, the other big operator, owned by venture capitalists CVC and Cinven, will decide next month whether to proceed with its flotation.

Both Corals and William Hill are worth about £1bn, valuations bolstered by the scope for bookmakers to exploit the anticipated boom in internet betting, and the relaxation of betting tax signalled last week by the Treasury.

Mr Smith has money to burn after overseeing a series of disposals since replacing Andrew Teare last year at the helm of the Rank leisure conglomerate. Among the businesses to have gone under the hammer are its Odeon cinema chain, bought by Cinven, the holiday operation Bourne Leisure acquired in September; and Tom Cobleigh, the pub chain bought by venture capitalist Electra. Deluxe, its film and video duplication arm, is expected to be the next to go.

Rank's disposals have already raised £1.4bn, almost equal to the £1.5bn of debts Mr Smith inherited, and leaving plenty of room for a major acquisition. Two of its three remaining core businesses - Mecca bingo and Grosvenor casinos - would sit comfortably beside a betting shop chain. It also owns Hard Rock Café.

As well as running Ladbrokes before joining Rank, Mr Smith's managed William Hill for a spell.

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