will the acquisition be approved?
Shares of Playtech (LSE: PTEC), a technology provider for the gaming industry, rose from 430p to 673p on Monday after news that the group had accepted a buyout offer from Aristocrat Leisure (ASC: ALL) , the Australian slot machine maker.
Playtech shareholders are expected to receive 680 pence per share and the board recommends shareholders approve the offer – 75% of shareholders need to vote their approval at an AGM that has not yet been scheduled. According to Danni hewson, financial analyst at AJ Bell, more than 20% of shareholders have already indicated that they will accept the offer.
The acquisition values ââPlaytech at around Â£ 2.1bn and while some might say it’s easy money – the offer is significantly higher than Monday’s price – it should be noted that between 2013 and 2018, the Playtech share price ranged from 800 to 1000 cents.
And as Hewson says, âEven if 75% vote in favor and it passes, that’s not the end of the story. This deal will be reviewed by the appropriate regulators and will take months, assuming there are no nasty surprises, the deal will not be concluded until spring 2022. “
Aristocrat and Playtech: a perfect pair
According to Aristocrat, who has a market capitalization of around A $ 29.2 billion (Â£ 15.8 billion), the combination with Playtech will provide it with material scale in the already large and growing segment of iGaming and online sports betting. Sion market research estimates that the global sports betting market will reach $ 179.3 billion by 2028.
Aristocrat says the Playtech deal is also expected to increase revenue and profit for them in the real money gaming (RMG) segment in North America while also catering to a larger target market that includes expansion into European markets thanks to Playtech Snaitech Business.
Danni Hewson, Financial Analyst, AJ Bell: âThe two companies fit together like peas in a pod. Playtech is one of the largest providers of online gaming software in the world, and Aristocrat Leisure supplies casino software and hardware, as well as slots, which is where it all started. It is thinking of the very attractive American market which is ripe for the picking since the Supreme Court decided to legalize sports betting and seems set to become a massive market.
Buy, sell or hold
With the stock price trading just below the bid price, investors might be tempted to buy in order to make at least a small profit, but as Hewson says, “there is no guarantee that the deal will come to an end and at the moment a bidding war seems unlikely: first because, behind the scenes, Aristocrat was sent several times to pack his bags before coming up with a fair offer, and also a rival company, Entain is also ripe for the reprise and dancing with its own suitor. With the current premium, it will be extremely tempting for investors to exit while things are going well. “