Harrah's proposal rejected by Rank

Harrah's Las Vegas

According to the U.K. Telegraph, Harrah's Entertainment made Rank Plc. an unusual offer last week, which the company rejected.

The offer was for Harrah's to sell a significant portion of its London Clubs International holdings to Rank in return for a stake of around 28%. The offer is thought to apply only to the U.K. part of the company and not its other overseas operations.

The Telegraph credits "people familiar with the discussions" for the insider information.

Harrah's bought LCI's ordinary shares just last year in November. At the time, the company was operating seven casinos in the United Kingdom and had four more in development. It also was operating two casinos in Egypt and one in South Africa, and had a consulting relationship with a casino in Lebanon.

The deal significantly widened Harrah's international operations and was meant to give the company a foothold in the newly deregulated British gambling market.

However, the environment for casinos and card rooms in the United Kingdom has changed in the past year.

While Tony Blair was in the prime minister's seat, he was all for opening up more casinos to help bring economic growth to certain areas. His replacement, Gordon Brown, is not as supportive of the idea.

The possibility of tougher legislation and a smoking ban have seen shares in leisure groups such as Rank take a hit as investors think the changes will affect profits.

The new Gambling Act has also forced Rank to remove approximately 950 gaming terminals from bingo clubs and casinos in the United Kingdom.

According to the Telegraph, analysts have been speculating that a "predator" such as Harrah's or another gaming group could emerge with a bid for Rank.

Harrah's Entertainment is one of the world's largest gambling companies with several casinos all over the world. It's also the owner of the World Series of Poker.

According to the Telegraph, it's unclear why the Las Vegas-based company made such an unusual offer to Rank.

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