Teare quits struggling Rank

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RANK, the troubled Butlins to Bingo leisure group, is likely to be broken up after Andrew Teare, its chief executive, yesterday accepted responsibility for the group's dire performance and resigned.

City analysts said Mr Teare's departure was likely to signal a change of strategy at Rank. "The company won't exist in its current form for too long," one expert predicted yesterday.

Rank shares jumped 13p to 239p yesterday as analysts calculated that the group's break-up value was at least 320p a share. Under Mr Teare's two-year tenure, Rank's share price has more than halved.

Speculation about a break-up was spurred by rumours that Ken Hanna, who masterminded the dismemberment of Dalgety, the pet food group, was being lined up to take over as chief executive. Sir Denys Henderson, Rank's chairman, was also chairman of Dalgety when Mr Hanna was appointed.

However, Rank's major shareholders cautioned the company not to hold a fire sale. "It's time to get stuck into conventional management of the business," one fund manager said. "Breaking something up in this way rarely produces value."

Mr Teare's departure was announced as Rank issued a gloomy trading update which showed that the crucial summer months were even worse than expected. In the quarter to 26 September, pre-tax profits before exceptional items dropped 20 per cent to pounds 111m.

The figures included a disastrous period at Deluxe, Rank's video duplication business. In the third quarter profits at the division fell 17 per cent to pounds 24m as it struggled to handle demand for copies of the video of Titanic. Rank said manufacturing problems and a short deadline had led it to subcontract a substantial part of the contract, which reduced profit.

The results shattered any remaining confidence Rank's board had in Mr Teare. Sir Denys, who was responsible for hiring Mr Teare and has supported his strategy in the past, said: "The Board believes an even more determined approach to drive the business forward is required and that this is the time for new leadership."

Although compensation has not yet been agreed Mr Teare, who is on a two- year rolling contract and was paid pounds 512,000 last year, is likely to receive more than pounds 1m.

Douglas Yates, Rank's commercial director, has taken over as acting chief executive and has put himself forward for the job. Outside headhunters have been appointed.

In a conference call with analysts Rank's finance director, Nigel Turnbull, said the group "will evaluate all options of realising shareholder value".

At the same time, he said Rank's heavy capital expenditure programme would be reigned in. The group is expected to spend pounds 550m on its operations this year, with a further pounds 100m going into joint ventures.

Heavy capital spending was a feature of Mr Teare's tenure as he tried to rejuvenate flagging brands. Its Odeon cinemas and Mecca Bingo halls were refurbished, while Butlins holiday camps were repositioned for family short breaks.