Playtech investors leap as Australian aristocrat unveils £ 2.7 billion takeover bid
laytech has become the latest London-listed gambling company to be targeted for a takeover, as operators rush to gain momentum and enter the US market.
Shares of Playtech jumped nearly 60% today after Australian gaming group Aristocrat unveiled a £ 2.7 billion offer for the company.
Aristocrat is offering Playtech investors 680p per share, which is a 58% premium over Friday’s closing price. Playtech’s board of directors supports the approach. Shares rose 249p to 679p.
Aristocrat’s offer is his fourth offer for Playtech but the first to be made public. The Australian company initially made an unsolicited approach in April.
The deal comes as gambling companies rush to profit from the deregulation of the U.S. gambling market, which is expected to become one of the largest betting and gaming markets in the world.
Trevor Croker, CEO of Aristocrat, said the deal “will unlock sustainable shareholder value by seizing opportunities in the fast growing global online RMG [real money gaming] segment as they open up, particularly in North America.
Aristocrat has its roots in the 1950s when he began his life as a manufacturer of slot machines. The company still makes them – many to Las Vegas – but over the past decade it has grown into an online gambling business through a series of offers.
The company now derives more than half of its revenue from the sale of betting and gaming technology and content to other businesses. The company is listed on the Australian Stock Exchange with a market capitalization of A $ 30 billion and has 6,500 employees in more than 80 countries.
Playtech, founded in 1999, builds white-label gaming technology, but has significant consumer activity through its Italian division Snaitech, which operates betting shops and online gaming sites.
Playtech Chairman Brian Mattingley said the Aristocrat deal “provides an attractive opportunity for shareholders to accelerate the long-term value of Playtech.”
CEO Mor Weizer said, “This agreement has the potential to improve our distribution, our ability to build new and deeper relationships with partners, and strengthen our technological capabilities. “
Investors holding just over 20% of Playtech’s 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 grappled with warnings about the benefits and impact of the pandemic.
“In recent years, Playtech has faced increased competition, regulatory changes and, of course, a global pandemic,” said Russ Mold, chief investment officer at AJ Bell.
In addition to online casino technology, Playtech is developing technology for financial trading. He is currently in the process of splitting this division, Finalto, and the takeover of Aristocrat is conditional on the completion of this sale.
“The business had gotten a little fuzzy and messy, but it was in the process of streamlining its operations, which, ironically, may have just made it just a bit more appealing to Aristocrat,” Mold said.
The Playtech takeover is the latest in a series of gaming deals to hit the London market. Earlier this year, Caesars Entertainment finalized a £ 2.9 billion takeover of UK 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 gambling is one area in which the London market clearly excels, as evidenced by the coveted looks that UK listed companies have garnered in recent months from the from foreign bidders, ”Mold said.