Wednesday June 29, 2011 : The situation at the UK online and land gambling group Rank plc appeared to be going from bad to worse this week, with conflicting signals on an Asian takeover bid leaving investors confused and in many cases angry.
Compounding an already serious situation, today (Tuesday) saw the resignations of chief executive officer Ian Burke and CFO Paddy Gallagher, apparently after holding conflicting views with the other directors.
The company issued a terse press release announcing the departures of Burke, who has been with the company since 2006, and Gallagher, who joined in 2008.
“Both Ian and Paddy have also given notice to terminate their employment as, respectively, chief executive and finance director and will remain with Rank so as to ensure an orderly handover to their
respective successors when they have been identified,” a company statement said.
The issue has its roots in an acquisition attempt by the Asian group Guoco Limited which has seen a remarkable series of pronouncements and recommendations from the company in recent weeks (see previous InfoPowa reports).
James Hollins, an analyst at Evolution Securities, perhaps best summed it up when he opined that Burke and Gallagher had felt their positions had become "untenable" due to the board’s "flip-flopping", which involved first rejecting the Guoco bid, then accepting it, a "forced recommendation", and finally taking the most recent "pragmatic but inconclusive recommendation" to shareholders dependent on their appetite for risk.
Hollins is of the view that the offer of 150p a share is substantially below what he regards as fair value of 185 p.
He warned that there remained the risk that more than 75 percent of shares may be in the control of Guoco by the end of the week, leading to a possible de-listing, and making the future of the company uncertain.
The departing executives appear to be of the view that it is now more than likely that the Guoco offer will result in a cancellation of the listing of Rank’s shares.
The Rank announcement revealed that the board is convening urgently to discuss the latest developments with its advisers and a further announcement will be made shortly.