UK Playtech buys 70.6% stake in Snaitech on the regulated market

(Reuters) – U.K. gaming tech company Playtech has said it has agreed to buy a 70.6% stake in Italian betting and gaming company Snaitech for € 291m ($ 359.2m) in cash, with the aim of generating most of its income on regulated markets.

Playtech would be required to make a mandatory takeover bid for the remaining Snaitech stake following the purchase of the 70.6% stake, he said on Thursday.

Including Snaitech’s debt, after making the mandatory takeover bid, the company’s enterprise value would be 846 million euros ($ 1.05 billion), Playtech said.

The stake, agreed with certain shareholders of the Italian company, would mean that 78% of the extended group’s income would come from regulated markets.

Snaitech is fully regulated in the markets in which it operates, Playtech said.

The operation, which would be financed by existing liquidity and new Playtech debt, should generate cost synergies of 10 million euros.

Snaitech, which is also involved in the management of racetracks and television services, generated revenue of 890 million euros and operating profit of 136 million euros in 2017.

For Playtech, the Italian deal comes amid sweeping regulatory changes in its UK home market, where lawmakers have hinted at drastic cuts to maximum betting limits in slot machines.

Playtech started 2018 with a lag in revenue for its games division following a crackdown on gaming unions in Malaysia, one of its largest Asian markets.

However, Milan-headquartered Snaitech, which has over 1,600 betting points in Italy, is also involved in sports and horse betting, online sports betting and casino games.

The mandatory takeover bid, if the initial acquisition goes through, would come on Snaitech’s delisting from the Milan Stock Exchange, Playtech said.

(Corrects the title and the first paragraph to say that Playtech will buy 70.6% stake for € 291 million, not € 846 million. Add a total enterprise value of € 846 million to the third paragraph )

Report by Rahul B in Bangalore; Editing by Sunil Nair