Playtech Agrees to Sell Finalto’s Financial Trading Business for $ 210 Million | Mergers and Acquisitions

Playtech has reached an agreement to sell its financial trading division Finalto to a consortium led by Barinboim Group and backed by Leumi Partners and Menora Mivtachim Insurance in a deal worth up to $ 210 million ($ 148 million pounds sterling / 171 million euros).

The deal, also backed by key members of Finalto’s management team, is worth up to $ 210m (£ 148m / € 171m) and includes an upfront payment of $ 185m , including $ 15 million deferred for up to two years. .

An additional $ 25 million will be payable subject to certain cash flow or other criteria being met by the business after the transaction is completed.

Playtech announced in March its intention to divest non-core assets and streamline its business operations, with a strategic focus on its core gaming businesses. This came after a 25.1% year-over-year decline on the other hand, turnover to 1.08 billion euros during its 2020 financial year.

The supplier had been weighing its options on the Finalto company – formerly known as TradeTech – for some time, after being approached by a number of interested parties about a potential sale last year. This led Playtech in August 2020 to announce that it would be open for sale of the business.

In January this year, Playtech revealed that it was in talks with the consortium over a possible sale, which has now resulted in an agreement between the two parties and the Playtech board of directors recommending shareholders to vote to approve the sale.

If the sale were to close in the current business environment, which it says remains uncertain due to the pandemic, Playtech would hold onto any product until there is greater “clarity” in the market. This, he said, would therefore reduce his net debt until the deal closes.

However, should the deal be concluded in the fourth quarter of this year as planned, and assuming greater market clarity, the supplier has said it will commit to return the capital to shareholders on where appropriate, while balancing the opportunities to invest in the business.

Prior to the pandemic, the division had struggled, but it has become a major driver of supplier revenue in 2020, particularly in the first half of the year.

“Playtech has a stated strategy to simplify the group and today’s announcement is the conclusion of a two-year process in which Playtech explored all avenues to maximize value and certainty for Finalto shareholders. “said Playtech Managing Director Mor Weizer.

“The sale also offers a good result for all stakeholders of the Finalto business, providing certainty for colleagues, customers and commercial counterparties. The consortium has in-depth knowledge of Finalto’s business and the markets in which it operates and we wish our colleagues every success in the future.

“For the future, Playtech will focus on its technological offer in B2B and B2C gambling, driven by our online expertise and supported by a solid balance sheet. We have created momentum in our business, as evidenced by our progress over the past twelve months in key markets such as the United States, Latin America and Europe.

“The agreements we have signed with new customers during this period once again demonstrate our ability as a leading technology provider and show the type of opportunities that we intend to convert to. to come up. “

The confirmation of the deal came as Playtech also released a business update for the four months through April 30, in which it said it continued to make progress against strategic and operational goals, including in key target growth markets of the United States, Latin America and Europe.

This included entering into new deals with the companies Greenwood in the US and Holland Casino in the Netherlands, while also noting strong performance from Caliente and other operations in Latin America.

Playtech said online growth remained “very strong” over the period in B2B and Snaitech, and as a result, it was able to increase its forecast for adjusted earnings before interest, taxes, depreciation and amortization ( EBITDA).

This is despite the fact that its retail business continued to feel the impact of the pandemic over the four-month period. Retailing has now reopened in the UK, but closures in Italy have continued for longer than expected, with sites across the country not due to open until at least the end of June.

Breaking down this performance further, Playtech said that in its core B2B segment, the online business performed well, although the retail-oriented parts of the business were affected by closures for the most part. of the period in key markets, in particular the United Kingdom and Greece.

Progress has been made in the United States through the strategic multi-state, multi-product deal with Parx casino operator, the Greenwood Companies. This has already seen the launch of content in Michigan, with further deployments slated for 2021 and 2022.

In Latin America, Playtech said Caliente was able to strengthen its position in Mexico, while WPlay in Colombia gained new momentum. Playtech also noted that its other structured deals in Guatemala, Costa Rica and Panama have progressed well and are expected to become significant contributors to revenues over the next few years.

Regarding the core of B2C, while this segment was strongly impacted by the closures of Snaitech retail stores in Italy due to the pandemic, Snaitech’s online activities continued the strong performance they achieved. from 2020 to 2021.

In Asia, Playtech said its activity in the region was stable, in line with levels reached in the second half of 2020.

Among other key developments during the period, Brian Mattingley has been appointed president-elect. Mattingley is due to succeed Claire Milne, who held the interim presidency, on June 1.

In addition, Playtech has made the decision to migrate its tax residence to the United Kingdom, which is now effective.

“I am delighted with the strong performance Playtech has provided so far in 2021, despite the ongoing challenges posed by the pandemic,” Weizer said. “The sale of Finalto is part of our strategy to simplify the business.

“We believe that due to the hard work and dedication of our employees, Playtech will emerge from the pandemic stronger than ever. Looking ahead, we are confident that the streamlined group and the exciting growth opportunities ahead will deliver significant shareholder value. “