The wave of consolidation sweeping across the international online gambling sector continues to gather strength with the announcement London-listed Playtech, the industry’s biggest software solutions provider, has accepted a £2.7 billion takeover bid. The Playtech board is recommending shareholders accept an offer that, at 680p-a-share represents a 58.4% premium on Friday’s closing share price as well as taking on the group’s £600 million of debt.
The bid for Playtech has been made by Aristocrat Leisure, an Australia-listed company that develops online gambling games, specialising in digital slot machines. The Playtech share price is up 58% today, indicating markets consider the deal to be largely concluded with little likelihood of a bidding war unfolding to push up the price.
Playtech told its investors the combined company would result in
“one of the largest B2B gaming platforms in the world, with the people, infrastructure and expertise to scale significantly further”.
The company further justified the decision by qualifying the progress it has made in pursuing an international growth strategy centred on the Americas as successful but at a slower pace than combining with Aristocrat to create “a truly best-in-class offer across all areas of gaming and sports betting”, will allow for. Playtech commented:
“The proposal put forward by Aristocrat therefore provides an opportunity for shareholders to secure faster delivery of Playtech’s long-term value at an attractive price.”
The online gambling sector has seen a trend towards consolidation in recent months with London-listed companies particularly popular targets. Entain, owner of the Ladbrokes and Sportingbet brands, is currently considering a £16.4 billion offer from U.S. company DraftKings, with a decision due tomorrow. 888 Holdings is to buy William Hill’s non-U.S. business for £2.2 billion.
The Aristocrat offer appears to have secured the backing of SpringOwl Asset Management, one of Playtech’s largest shareholders, who commented via chief executive Jason Ader that it saw the deal as representing “a compelling alignment of strategic interests”.
“This would be a significant victory for Brian Mattingley in his short tenure as chairman and we congratulate him on his efforts to address our concerns as long-term shareholders and put the company in a position to unlock value and attract investment into Playtech.”
Founded by Israeli tech and property investment billionaire Teddy Sagi in 1999, Playtech develops and supplies software to online casinos and other online gambling operators like sports betting companies. It was listed in 2006 and has since succcesfully executed a strategy of growth through acquisition.
The Aristocrat bid has already secured the public backing of Playtech shareholders representing almost 21% of the voting power of issued equity. The Australian company is listed on the Australian Securities Exchange and is one of the top twenty ASX-listed companies by market capitalisation with a value of around £15.8 billion.
As well as producing the electronic slot machines found in bars and casinos, Aristocrat also develops digital products including casino management systems and freemium mobile games. Its gambling products are licensed in over 300 jurisdictions across 80 countries and the company employs around 6500 staff across 20 international locations.