Playtech investors hit the jackpot as Australian aristocrat unveils £2.7bn takeover bid
Aristocrat’s bid is its fourth bid for Playtech but the first to go public. The Australian company originally made an unsolicited approach in April.
The deal comes as gambling companies race to take advantage of the deregulated US gambling market, which is set to become one of the biggest betting and gambling markets in the world.
Trevor Croker, CEO of Aristocrat, said the deal would “unlock sustainable shareholder value by seizing opportunities in the fast-growing global online RMG [real money gaming] segment as they continue to open up, especially in North America.
Aristocrat traces its roots back to the 1950s when it started life as a slot machine manufacturer. The company still makes them – many bound for Las Vegas – but over the past decade has transformed into an online gambling business through a series of deals.
The company now derives more than half of its revenue from selling betting and gaming technology and content to other companies. The company is listed on Australiawith a market capitalization of AU$30 billion and has 6,500 employees in more than 80 countries.
Playtech, founded in 1999, develops white-label gaming technology, but has significant consumer business through its Italian division Snaitech, which operates betting shops and online gaming sites.
Playtech Chairman Brian Mattingley said the deal with Aristocrat “provides an attractive opportunity for shareholders to accelerate Playtech’s long-term value.”
CEO Mor Weizer said, “This deal has the potential to improve our distribution, our ability to build new, deeper relationships with partners, and strengthen our technology capabilities.”
Investors holding just over 20% of Playtech shares have already backed the offer and Peel Hunt said shareholders are likely to approve the sale.
Playtech shares peaked at 959p in 2017. Since then it has struggled with profit warnings and the impact of the pandemic.
“In recent years, Playtech has had to deal with increased competition, regulatory changes and, of course, a global pandemic,” said Russ Mould, chief investment officer at AJ Bell.
In addition to online casino technology, Playtech develops technology for financial trading. It is currently in the process of splitting off that division, Finalto, and the takeover of Aristocrat is conditional on the completion of that sale.
“The business had gotten a bit hazy and messy, but it was streamlining its operations, which ironically may have just made it a more attractive piece for Aristocrat,” Mr Mold said. .
The Playtech takeover is the latest in a series of gaming deals on the London market. Earlier this year, Caesars Entertainment completed a £2.9 billion takeover of British bookmaker William Hill and MGM and DraftKings tried to buy Entain, the owner of Ladbrokes and Coral.
“It may not be popular with ESG investors, but gaming is an area where the London market clearly excels, as evidenced by the eager eyes that UK-listed companies have attracted in recent months of the crisis. share of foreign bidders,” Mr Mold said.