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The Rank Group is planning to deliver a substantial return of cash to its shareholders after the sale of its Deluxe film processing business for $750m.

The move will act as a sweetener to a likely dividend cut from the UK leisure group after the sale of the cash-generative division, given that the disposal will dilute earnings and leave Rank’s dividend uncovered.

Reports suggest that Rank may return up to £300m ($517m) to shareholders through a share buy-back, while the dividend – at 14.6p last year – could be cut by one-third.

However, Rank said it had not made any decisions.

Rank, which announced the Deluxe sale just before Christmas, said at the time that its “capital structure and dividend policy was under review”. It also said it would return some of the proceeds of the sale to shareholders, adding that it would give a full update at its preliminary results in March.

The long-awaited sale has left Rank more focused on its gambling and leisure businesses, but has also raised expectations it may be vulnerable to a takeover.

The owner of the Mecca bingo and Hard Rock Cafe chains has not commented on a recent report of abortive merger negotiations with William Hill. But its shares have risen 20 per cent since August amid growing takeover speculation.

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