Rank 'to demerge film business'

UK leisure group Rank will unveil plans this week to demerge its film services division and sell its media business, it emerged today.

The company, formerly famous for making hundreds of films including the Carry On series, plans to turn the film unit into a separately listed company, the Sunday Telegraph reported.

It also plans to integrate its gambling division, which includes Mecca bingo halls, with its Hard Rock Cafes and hotels, the report said.

The divestments would represent the climax of a long restructuring that has seen Rank dispose of the Odeon cinema chain, Pinewood film studios and the Butlins holiday camp business, among others.

It left the group with three core divisions – gaming, Hard Rock and Deluxe Films, which provides technical services to Hollywood studios. The group also owns Deluxe Media, which makes and distributes DVDs and videos.

Rank wants to focus on its gaming and bars and hotels business, including the extension of the Hard Rock brand to its casinos, trials of which have been a success.

Adviser Goldman Sachs is understood to have told Rank that the demerged Deluxe Films business will be worth about £300 million.

Deluxe Media is seen as a less successful business and last year made profits of £21.5 million on a turnover of £392.1 million, although its success in moving to DVDs from VHS videos is likely to make it a strong target for private equity buyers.

Analysts expect London-based Rank to reveal the plans as part of its annual results announcement on Friday.

A Rank spokesman said the company would not comment ahead of its results, but added: “They will make a statement on the work they have done to date on the separation of their Deluxe business.”

The group is expected to turn in annual pre-tax profits of £170 million, down from £194 million beforehand.

Rank owns 34 Grosvenor casinos, the Mecca bingo chain and more than 100 Hard Rock Cafes in 38 countries.

J. Arthur Rank formed the group in the early 1940s and it was for many years principally a leading UK film producer and cinema owner before entering into a joint venture in 1956 with Haloid Corporation, subsequently renamed Xerox Corporation, to form Rank Xerox, which became a manufacturer and distributor of copiers, laser printers, facsimile machines and other business-related products in most parts of the world.

Rank’s profits from those activities were used to diversify into a range of other leisure activities, primarily in the UK, including hotels and roadside service areas and vacation centres.