Aristocrat (ASX: ALL) share price jumps 8% to all-time high after raising $ 895 million


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The Aristocrat Leisure Limited (ASX: ALL) The stock price has come back from its three day trading stop and is soaring.

As of this writing, shares of the gaming tech company have risen 8% to a record high of $ 49.39.

Why is the Aristocrat share price increasing?

The Aristocrat share price is up today after the announcement of the success of the institutional part of its $ 1.3 billion offer.

According to the statement, the company raised approximately $ 895 million at the offering price of $ 41.85 per new share. This represents an 8.6% discount from its last closing price.

Management said the offer was strongly supported by institutional shareholders, with around 92% subscription by eligible institutional shareholders.

In addition, a bookbuild for the missing shares of the Institutional Right offering was completed on Wednesday. The bookbuild was cleared at a price of $ 47.10 per new share, which represents a premium of $ 5.25 over the offering price. It is also a premium of 2.8% compared to the Aristocrat share price before the end of trading. Which shows how positive investors are about his plans for the funds.

Why is the company fundraising?

The company on Monday launched its offering of rights to raise funds for the proposed acquisition of the world’s leading provider of online gambling software and content, London-listed Playtech, for an enterprise value of 5 billions of dollars.

Playtech has two key business segments: business-to-business (B2B) gambling and business-to-consumer (B2C) gambling.

The Company’s B2B gaming operations include the design, development and distribution of software and services to the online and land-based gaming industry. This covers all of the key segments of real money online gaming (RMG online) including casinos, live casinos, poker, bingo and sports betting, monetized through a revenue sharing model.

While Playtech’s B2C gaming operations mainly consist of Snaitech (Italy). It is a vertically integrated retail and online business that takes advantage of Playtech’s proprietary technology and capabilities. Management notes that as the leading multi-channel gaming operator based in Italy, it is free from any significant channel conflicts with Aristocrat’s existing operations. Other B2C brands include HPYBET and SunBingo. HPYBET is the B2C retail sports betting business of Playtech, which operates sports betting shops in Austria and Germany.

The version notes that Playtech is very profitable. In fiscal 2019, for example, Playtech’s revenue on an adjusted basis was $ 2.3 billion and its EBITDA was $ 586 million.

What was the reaction to the acquisition plan?

The Morgans team were delighted with the news. In response, the broker reiterated its additional rating and raised its target on the Aristocrat share price to $ 52.90.

The broker notes that the deal will significantly expand the company’s total addressable market through the growth of the global online RMG market.

He commented, “The proposed acquisition will give ALL instant scale and capacity for growth in the global RMG online space, a $ 70 billion market that is expected to grow significantly in the years to come as the market continues to grow. American market will open up. It expands and diversifies ALL’s total addressable market from a $ 230 billion market including land and mobile games, to a $ 300 billion market that will now include online RMGs (iGaming and sports betting in line). Playtech will provide ALL with a platform to leverage its content across new distribution channels and new markets. “

This partly explains why the Aristocrat share price is rising despite its significant capital raising.