However, Rank has indicated that it would still entertain offers from potential buyers of the business.

Sources familiar with the company said that a flotation had emerged as the more likely outcome, with Rank shareholders likely to receive equity in the demerged group on a one-for-one basis. Rank’s brokers, Merrill Lynch and Deustche Bank, are expected to handle the share sale.

Rank is understood to have started the search for executives with experience running quoted media companies to head up the division, whose operations include film distribution, post production and the Hollywood digital lab EFILM.

But selling the business remains an option, and it is understood that Michael Green, the former Carlton chairman, is among potential buyers to express an interest. Several private equity firms, including Candover and Apax Partners, are also understood to be looking at the business, which employs more than 6,000 people and is highly cash generative.

Analysts have said that Deluxe could fetch more than £600 million, but have noted that change-of-control clauses in some of its contracts with Hollywood studios might complicate the process.

It would be an attempt at third time lucky for Mr Green if he does bid for Deluxe. The media veteran was beaten in the race to acquire the Odeon cinema chain by Guy Hands and was also dropped from the running for ITV’s Moving Picture Company (MPC), which provides visual effects and post production. Ironically, Deluxe was also among the bidders for MPC, with rival Technicolor, though it is not clear if either is on the final list.

Rank is withdrawing from the film business ahead of looming changes to UK gambling legislation, which will allow casinos to install more slot machines and advertise their products.

The company is also selling its Deluxe Media business, which manufactures and distributes videos and DVDs and is expected to fetch about £100 million. Goldman Sachs, the investment bank, has put out a book on the sale and is understood to have generated interest among several private equity firms.

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