Harrah may revisit Rank

Harrah's Entertainment, the American gaming giant, has appointed advisers to explore strategic options in the European gambling market, including a potential bid for UK casino and bingo group Rank.

The Las Vegas-based owner of London Clubs International, the UK casino operator, has appointed Morgan Stanley and Rank's former broker, Deutsche Bank, to review its European options.

Harrah's, which also owns 40 mega casinos in three countries under the Harrah's, Caesars and Horseshoe brands, is itself the subject of a $17.1bn (£8.6bn) takeover by private equity groups Apollo and TPG, and is not expected to make any immediate move. The Harrah's takeover is expected to complete shortly.

Harrah's has, however, already made one abortive approach to Rank, which is currently on a valuation of just over £350m after its Mecca bingo business was clobbered by the smoking ban and a sharp cut in the permitted number of £500 jackpot machines. Rank has recently rebuffed an approach from Duke Street Capital for its bingo business.

Last month, Harrah's proposed injecting the majority of London Clubs' casinos into Rank in return for a stake of around 28pc in the combined group.

Since then, Malaysian casino operator Genting, which owns Stanley casinos in the UK, has taken a stake of over 9pc in Rank, while the family-controlled UK property developer Richardson Capital has acquired a similar-sized holding.

One source close to the situation said: "I think this is a slow-burn situation for Harrah's. There's not a huge amount going on at the moment but they can move pretty quickly if they need to."

Harrah's and Genting tussled over London Clubs, which the US operator acquired in August 2006 for £279m. At the time Genting held a 28pc stake in London Clubs, but decided to sell to Harrah's rather than launch a counter bid.

One analyst said: "Whatever happens, this is the beginning of the end for Rank."

Morgan Stanley and Deutsche's remit extends to examining opportunities if the Government reintroduces legislation for an additional 16 casinos in Britain. The two banks are also reviewing opportunities for Harrah's in mainland Europe. None of the parties involved would comment.

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