The board of Rank Group again altered its position on the bid from Guoco Group, saying shareholders should reject the offer if they are not worried about the Hong Kong-based investment company cancelling its listing status.
The gaming company angered UK institutional investors on Thursday when it reversed policy and recommended acceptance of the 150p a share offer from Guoco, which is led by Malaysian billionaire Quek Leng Chan and which owns 41 per cent of Rank.
On Monday, Rank refined its advice in response to Guoco’s statement on Friday that it would talk to the Financial Services Authority about keeping its UK listing even if its shareholding breached the 75 per cent level. Guoco has received acceptances from shareholders that nominally takes its holding to 56.8 per cent.
In a lengthy statement, Rank said that while Guoco’s statement on Friday was helpful, it did not provide the board with certainty that the listing would continue if the FSA cancelled the quotation.
It said the board had sought an unconditional commitment from Guoco that it would continue the listing by selling down enough shares to maintain the quote.
In the event of the listing being cancelled, the board wanted Guoco to allow existing shareholders to buy stock at 150p a share for an 18-month period after delisting.
But Rank said Guoco would not provide these commitments and that, therefore, the risk of the listing being cancelled remained.
The board said it continued to believe the 150p offer substantially undervalued the business and failed to reflect its prospects.
“For some Rank shareholders these risks may be acceptable in the context of the benefits of continuing to hold their Rank shares. For other Rank shareholders these risks may outweigh these potential benefits,” the group’s statement said. It said shareholders concerned about the listing being cancelled should accept the offer, but those unconcerned should reject it.
Aviva, which holds 4.16 per cent of the stock, criticised the board’s changing position. “It wasn’t beyond the wit of man to communicate with shareholders and ask what they wanted,” said David Lis of Aviva.
“One would hope fellow institutional shareholders would feel equally strongly and are not going to accept the bid. We are keeping our options open. Hopefully, the listing will be maintained and we will continue to benefit from being a shareholder in the company.”
James Hollins, analyst with Evolution Securities, said the board’s new position was “a pragmatic approach”, reflecting a difficult situation for the board and for shareholders.
The Office of Fair Trading said it would not refer the proposed takeover to the Competition Commission.