Cinven backs €1.87 billion buyout of Gala Group
Extract of RNS Annoucement
Cinven and Candover, the leading European buyout specialists, announce that they have financed the buyout of Gala Group (“Gala” or “the Company”), the bingo, casino and online gaming company, for €1.87 billion (£1.24 billion). Gala is being acquired from CSFB Private Equity and PPM Ventures. John Kelly, Gala’s CEO, and his senior management team will stay in their roles as part of the deal.
The acquisition has been structured with equity finance from the €2.7 billion Candover 2001 Fund and the €4.4 billion Third Cinven fund. Candover and Cinven will each invest £274 million for equal equity stakes in the business. Acquisition financing to support the transaction has been arranged and underwritten by CSFB and Merrill Lynch.
Gala is the UK’s fastest growing retail gaming company, operating in the bingo, casino and online markets, with 6 million members. Since it was sold by Bass in December 1997, Gala has increased EBITDA (before exceptional items) from £36 million to an expected £133 million for 2003. Over the same period, it will have invested over £150 million in capital expenditure to enhance facilities for bingo, casino and online customers.
John Kelly, Chief Executive of Gala Group, commented:
“This deal represents a fabulous opportunity for Gala to grow in the proposed modernised gaming environment. I believe there will be strong potential for both organic growth and expansion by acquisition in the coming years and the financial backing of Candover and Cinven will help Gala realise these opportunities. This is an exciting time for the gaming industry and today’s announcement will allow us to be at the forefront of any change.”
Marek Gumienny, Managing Director of Candover, said:
“Gala offers an opportunity to back a leading management team which has consistently demonstrated its ability to grow profits and market share. Gala’s organic growth track record, robust cash flows and recent expansion into casinos will ensure it is well placed to exploit any further gaming de-regulation. We look forward to working with Gala and will make sufficient funding available to allow the business to grow.”
Richard Munton, Director of Cinven, added:
“Gala provides all the qualities that we look for in an investment: a highly respected management team, a market-leading position, strong financial disciplines and track record and market opportunities through which to drive growth both organically and through acquisition.”
Candover and Cinven were advised by Merrill Lynch and UBS Warburg. Gala Group was advised by CSFB.
*Candover means Candover Investments plc and/or Candover Partners Limited as General Partner of the Candover 2001 Fund.