Gala Group joint venture with Harrah’s Entertainment to develop UK regional casinos
Cinven, today announces that Gala Group (“Gala”), the UK’s leading mid-market gaming operator, plans to form a 50:50 joint venture with Harrah’s Entertainment, Inc. (“Harrah’s”), which operates the largest and most diversified casino network in the United States.
The joint venture agreement provides that, following the successful introduction of the proposed new UK gaming legislation, Harrah’s and Gala will join forces to build a up to eight regional casinos, each consisting of 30,000 to 50,000 square feet of “state-of-the-art” gaming space and a wide selection of entertainment and dining experiences. The casinos will operate under the Gala brand.
Assuming all benefits of the joint venture are realized, Gala and Harrah’s anticipate jointly investing up to $1 billion (approximately £600 million) to develop a gaming business in the UK market that could result in the creation of thousands of new jobs, generate tax revenues and provide superior casino entertainment opportunities to casino customers.
The parties plan to structure the joint-venture agreement to allow both Harrah’s and Gala to pursue expansion of their respective core markets throughout the UK. Gala will continue to develop and operate community-based casinos, and Harrah’s expects to pursue development of wholly owned large-scale destination casino resorts.
The parties are negotiating a definitive agreement that will be subject to customary closing conditions, such as applicable regulatory approvals, as well as approval by each company’s board of directors.
Commenting on the planned joint venture, Gala Group Chief Executive John Kelly said:
“The casinos we plan to develop with Harrah’s will set a higher standard for gaming than anything we have seen in this country. The combination of Gala’s excellent UK credentials, including brand strength and knowledge of the market place, and Harrah’s expertise in operating large-footprint gaming facilities presents a terrific opportunity. As partners, Gala and Harrah’s have already begun to identify potential sites for regional casinos in what is clearly a large and exciting development market.”
Dick Munton, director of Cinven, commented:
“This exciting joint venture represents a powerful combination of Gala and Harrah’s industry-leading strengths.”
Cinven financed the €1.87 billion buyout of Gala jointly with Candover in Feb 2003.