Eddie Jordan pulls out of race to buy Playtech

Former Formula 1 team boss Eddie Jordan has withdrawn a potential bid for gambling company Playtech over fears a group of Asian investors who recently bought the company will block the agreement.

Jordan’s acquisition vehicle, JKO Play, was expected to offer a $750 per share offer for Playtech, which provides back-end technology to games companies such as Entain. JKO planned to release a statement Friday morning announcing its intention to pull out, said three people involved in the process.

Its bid would have put it in competition with Australia’s Aristocrat Leisure, whose bid had been recommended to shareholders by Playtech’s board.

This month, the UK Takeover Panel extended the deadline for JKO to make a bid from January 5 to January 26, after announcing interest in November.

Aristocrat’s offer at 680p per share is lower than the current Playtech share price, which has jumped around 72% since Aristocrat’s offer was accepted by the board last October in due to competing interests of Hong Kong-based asset manager Gopher Investments and JKO.

Gopher dropped its bid for the company in November.

Two advisers working separately on the deal said JKO decided against its offer, fearing that a bloc of Asian investors, who have taken stakes in Playtech since October and now own about 27% of the company, hinder any deal that did not match their perception of the value of the company.

“In these circumstances, the economy becomes tricky for any bidder,” said one.

JKO and Playtech declined to comment.

Playtech’s board added Friday morning that it “continues to seek engagement from all of its shareholders regarding Aristocrat’s offer,” but said that due to lack of engagement from “certain investors who have disclosed or taken material positions,” he was unsure whether Aristocrat’s offer would be approved at upcoming shareholder meetings.

Meetings are scheduled for February 2.

As part of its offer, JKO intended to sell Playtech’s Italian company Snaitech to Entain to help fund the offer, two people involved in the process said. Entain’s rival Flutter bought Italian game company Sisal in December.

The battle for control is the latest in the gambling industry where companies are increasingly looking to consolidate or find greater financial clout in order to cope with tougher regulations, as well as to penetrate new fast-growing markets such as Latin America and the United States.

Playtech, which was founded by Israeli billionaire Teddy Sagi in 1999, holds the rights to acquire a significant stake in Mexican gaming company Caliente and has expanded into the United States, launching two live casino facilities, through which it broadcasts casino games, in Michigan and New Jersey in December.

Aristocrat intends to press ahead with its bid at the current price, which values ​​Playtech at £2.7bn, despite concerns that investors in the Far East may come together and block any deal, said a source working on the offer.

The aristocrat declined to comment.