What Aristocrat’s $ 3.9 Billion Playtech Takeover Means for Online Gambling


Aristocrat is the Australian and one of the largest slot machine makers in the world. Source: AP

Australian slots maker and global gaming technology company Aristocrat Leisure is making waves around the world today, with a $ 3.9 billion takeover bid on Playtech, the world’s largest provider of online gaming software to the world.

Aristocrat announced the proposed acquisition to ASX on Tuesday morning, in a deal that values ​​Playtech at around $ 5 billion.

The deal looks likely to go ahead, with Playtech having already asked its shareholders to vote in favor of the takeover.

The acquisition has ramifications for the rapidly growing $ 94 billion online real money gaming market, with Aristocrat poised to become a major player, in addition to its strong hold on physical gaming machines in the whole world.

The Playtech Agreement

Aristocrat Leisure’s offer to acquire Playtech values ​​the London Stock Exchange-listed online gambling software and content provider at an enterprise value of $ 5 billion.

Enterprise value is a measure of a company’s total value, including not only its market capitalization – the value of the total shares issued by the company – but also the debt and cash on the company’s balance sheet. business.

The Playtech PLC logo displayed on a smartphone with the Union Jack flag in the background.  Source: Getty Images

Playtech is the world’s largest online gaming software provider. Source: Getty Images

Playtech develops platforms and content for the global gaming industry, with more than 7,000 employees in 24 countries and 170 licensees worldwide.

Playtech shareholders will receive 680 pence per share held – the equivalent of around $ 12.50 – which is a 66% premium over the average closing price of Playtech stock over the past three months. Not a bad deal.

Aristocrat will fund the acquisition with $ 1.1 billion of existing cash, a $ 2.75 billion term loan and $ 1.3 billion fundraising, giving Aristocrat shareholders the opportunity to invest more.

Who is Aristocrat?

Aristocrat is one of Australia’s largest state-owned companies, with a market capitalization of just under $ 30 billion.

The company describes itself as a “global gaming powerhouse”; it is licensed in approximately 300 gaming jurisdictions and operates in over 90 countries.

The largest slot machine maker in Australia and by extension one of the largest in the world, Aristocrat also owns a range of digital businesses, including Plarium, which owns the hugely popular Raid Shadow Legends mobile role-playing game being created. by numerous YouTubers and has generated over $ 500 million in lifetime revenue.

What’s behind the deal

What makes Playtech most attractive to Aristocrat are its business-to-business (B2B) gaming operations, which include the design, development and distribution of software and services to the online and in-person gaming industries.

Then there is the business-consumer (B2C) angle. Playtech also operates Italian online retailer Snaitech, as well as other B2C brands, from sports betting to mobile games.

Row of electronic slot machines in a casino.  Source: Getty Images

Aristocrat is looking to increase its exposure to the real money online gaming market, which is worth approximately $ 94 billion. Source: Getty Images

Aristocrat CEO and Managing Director Trevor Croker said the deal would combine Aristocrat’s world-class gaming content and customer and regulatory relationships with Playtech’s global real-money online gaming platform. and the European B2C footprint.

“The combined group would offer a broad portfolio of end-to-end solutions for gaming customers around the world, as well as seamless player experiences, underpinned by a

focus on responsible gameplay and innovation, ”he said.

“The recommended offering is complete and fair value and reflects the strategic potential of the suit in a global gaming industry that continues to migrate online, driven by technology and deep-rooted change in consumers.”

Playtech CEO Mor Weizer said the deal simply unlocks the “next phase of growth” for the company.

“This agreement has the potential to improve our distribution, our ability to build new and deeper relationships with partners, and strengthen our technological capabilities,” he said.

“The combination of our two companies creates one of the largest B2B gaming platforms in the world, with the people, infrastructure and expertise to provide our customers with a truly best-in-class offering across the board. games and sports betting. “

The rise of real money online games

Aristocrat is looking to increase its exposure to the real money online gambling market, which is exactly what it sounds: gambling, but online, and for real money.

The real money online gaming industry is worth approximately $ 94 billion.

“The business will be uniquely positioned to create sustainable shareholder value by seizing opportunities in the rapidly growing global real money online gaming segment as they continue to open up, particularly in North America,” Croker said.

Like just about everything else, the online gaming industry has also seen tremendous growth due to the COVID-19 pandemic. According to the Australian Institute of Family Studies, 78% of Australian gamers spend their money online, up from 62% before COVID-19.

As reported by Yahoo in the past, Australia trumps the United States in terms of individual game losses each year.

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