LONDON Gaming group Rank (RNK.L) could have to sell six casinos in Britain to win clearance for a takeover of a rival operator, the Competition Commission said on Tuesday.
Rank had agreed in May to buy the casino business of private equity-owned Gala Coral in a 205 million pound ($332 million) deal which would add 23 UK casinos to its existing 35-strong chain and make it Britain's biggest casino operator.
The initial deal has since lapsed but the two parties are still discussing a merger.
The deal would leave Rank, majority-owned by Malaysia's Guoco Group (0053.HK), and Genting (GENM.KL), also Malaysian owned, as the only two major casino operators in Britain, the Commission said in a provisional report.
The merger risked damaging competition in Aberdeen, Liverpool, Stockton-on-Tees, Bristol and Cardiff, as well as Edinburgh, where Rank holds a license but does not currently operate a casino, the report said.
Possible remedies included requiring Rank to find buyers for operations in the six affected areas, the Commission said.
Other solutions were casinos in affected areas being excluded from the transaction or the whole deal being blocked.
"Our concern is that with two of the national players merging, this will leave a number of areas with much reduced competition where casino customers could consequently lose out through a poorer casino offer," said Martin Cave, deputy chairman of the Competition Commission.
"We are now going to look at the most effective way to preserve competition in these areas and whether this can be achieved in a way that allows an amended version of the deal to go ahead," he added.
The Commission plans to publish its final report by February 20.
($1 = 0.6173 British pounds)
(Reporting by Keith Weir, Editing by Rosalba O'Brien)