Major Nevada gaming companies have seen stock prices tumble in November following record increases in September and October, mostly driven by profit-taking. The Applied Analysis Gaming Index shattered its previous record high in September but last month reported the largest monthly decline since the index started in 1998. Only Station Casinos and Bally Technologies bucked the trend to show significant gains.

In the UK October brought a share fall for Rank Group following a profits warning. The company blamed a period of volatility on a ‘lack of visibility unprecedented in the UK gaming industry.’ In its trading statement Rank admitted a significant deterioration at both Mecca Bingo and Grosvenor Casinos. Despite this Rank shares have now risen by around 43% since they fell to the lowest point in 19 years less than two weeks ago.

It was announced today that Genting International subsidiary Palomino Ltd has purchased a 9.4% holding in Rank Group, making a takeover of the company likely at some point next year. Rank, which operates 102 bingo halls and 33 casinos in the UK, lost much market value when the advent of a smoking ban adversely affected visitor numbers and profits. Takeover rumours have been rife for some time.

In May this year Rank was considered a less suitable target for a takeover following the new UK gaming tax regime. In November the company was said to have rejected an offer by Harrah’s Entertainment. Genting would probably find it difficult to obtain regulatory approval for a takeover bid as it is already the UK’s largest casino operator, having bought Stanley Leisure in 2006.

Other gaming companies are being cited as possible bidders for Rank. Ladbrokes, Aspers and BIL International, now known as GuocoLeisure Ltd, have all been mentioned. A potential takeover bid in the offing and the Genting share acquisition continue to push up Rank’s share price as analysts repeat ‘buy’ recommendations. However, today’s share price of 111.50p has a long way to climb to get back to the 52 week high of 265.70p achieved on 4 December 2006. (E-12.03.07)

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