Vardon expands into bingo: London Dungeon owner cuts dependence on summer season

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The Independent Online
VARDON, the recently floated owner of the London Dungeon, is expanding into bingo with the acquisition of 10 clubs. Finance for the pounds 7m deal is coming from a pounds 13.5m placing and open offer, writes Tom Stevenson.

David Hudd, chairman, said the move would reduce Vardon's dependence on the summer season. Unlike the group's other attractions, which include nine Sea Life centres, bingo is only marginally affected by seasonal fluctuations.

Mr Hudd added that bingo, traditionally played by older women, was growing in popularity with younger, more affluent people. That trend had accelerated with a move from city centre sites, typically former cinemas, to large edge-of-town venues seating up to 1,500 players.

The industry is dominated by Bass, which acquired Granada's sites, and Rank, which took over Mecca's venues. Both own about 180 clubs, with the next-largest chain comprising 23 sites. The game attracts 2.8 million players a week in 950 clubs.

Nick Irens, chief executive, said he planned to open two or three sites a year, at a cost of about pounds 2m each, and expected the division to be self-financing within two years. He hoped for return on capital of at least 20 per cent.

The 10 clubs are being acquired in two separate deals, both worth an initial pounds 3.5m. Three sites are being acquired from Ritz, a company controlled by Ray Hipkin, who will join the board of Vardon on a salary of pounds 70,000.

Mr Hipkin, who formed Ritz in 1977, also built up a chain of video stores before selling out to Cityvision, which in turn was acquired by Blockbuster, the US video rental chain.

The bingo clubs made a pre-tax profit of pounds 196,000 before property sales last year. A further pounds 2m deferred consideration could be paid depending on the trading performance of a new club in Borehamwood, which opens later this month.

The other seven clubs, which made pounds 341,000 last year, are being acquired from Wembley, the owner of the North London stadium.

Existing shareholders are being offered shares on the basis of two for five held at 72p. Vardon's shares, floated at 45p last October, ended yesterday up 4p at 82p.