Rank’s board changes recommendation to shareholders
Even though Guoco Group’s offer of 150p per share was at first recommended to shareholders by the Rank Group Plc board, it appears that the company changed its opinion and decided to withdraw its recommendation in time for the closing of acceptances of the offer.
Apart from the fact that such an offer undervalues the company, Rank specified, in case Guoco obtains 75 percent of Rank shares it will be in a position of being legally entitled to de-list the company which would leave those shareholders who rejected the offer without the protection available to them under Listing Rules.
It was also specified by the board that if the company becomes private, “the move would significantly reduce the liquidity and marketability of the Rank shares which have not been accepted into the Offer and the value of the shares may be significantly adversely affected as a consequence".
Even though Guoco stated that it plans to maintain the listing, it still decided to reserve its right to consider all options available. Therefore, the board's independent directors decided to take the offer for their own beneficial shareholdings, recommending Rank’s shareholders to do the same.
It has been reported that "investors understood the board's concerns but many were deeply disappointed. “I’m gutted,” said one. “The company’s been stolen, really.”
Another comment arrived from Richard Colwell of global asset firm Threadneedle: “We’ve had extensive engagement with management since the bid process started. They’ve obviously had a lot of advice, and there’s been a lot of debate. They did this with a heavy heart.”