Sports betting software and online gaming supplier Playtech is set to be purchased by Australian-listed gaming manufacturer Aristocrat Leisure, which has announced a cash offer of £2.7 billion for the FTSE250 technology group.
Aristocrat aims to leverage the company to boost its revenues, ‘operate and innovate’ in the European market through the acquisition’s Snaitech division, reach a broader range of customers and provide material scale in online gaming via the transaction – which represents a 58% premium on Playtech’s closing price last week.
Funding for the all-cash transaction will be provided by a £864 million equity raising, alongside new debt and existing cash resources, whilst Playtech shareholders have been unanimously recommended to vote in favour of the deal by the company’s board.
The announcement follows the publishing of Playtech’s H1 2021 trading results last month, reporting a strong performance for Snaitech – particularly in Italy – with the division experiencing revenue growth of 95% to €123.4 million.
Mor Weizer, CEO of Playtech, remarked: “This transaction marks an exciting opportunity in the next stage of growth for Playtech, and delivers significant benefits to our stakeholders, including our customers, our shareholders and our incredibly talented people.
“This deal has the potential to enhance our distribution, our capacity to build new and deeper relationships with partners, and bolsters our technological capabilities.
“The combination of our two companies builds 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 offer across all areas of gaming and sports betting.”
Commenting on the proposed purchase, Aristocrat CEO and Managing Director, Trevor Croker, noted that the strategic potential of the merge is reflected in the continuing shift of the global sector online.
He remarked: “Adding Playtech’s talented team with Aristocrat’s established strengths and momentum will create a true industry leader in the global online RMG space, particularly in terms of our B2B capabilities.”
The offer represents a valuation multiple of 11.4x Playtech’s adjusted EBITDA for the 12 months to 30 June 2021 and Aristocrat has already made deals with major shareholders for just over 20 per cent of Playtech’s outstanding shares.
Aristocrat values Playtech’s ordinary shareholding at £2.1 billion, as the ASX company proposes a total £2.7 billion enterprise valuation to be recommended to Playtech investors.
Croker continued: “The proposed combination would bring together Aristocrat’s world-class gaming content and customer and regulatory relationships with Playtech’s industry leading global online RMG (real-money gaming) platform (B2B) and 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 shared focus on responsible gameplay and innovation.
“Additionally, the business will be ideally positioned to unlock sustainable shareholder value by seizing opportunities in the fast-growing global online RMG segment as they continue to open up, particularly in North America.”
The purchase is still dependent upon the approval of Playtech’s shareholders, which will review the proposed purchase at the company’s next Court Meeting and General Meeting, with the deal requiring the support of 75% or more of all stakeholders.
Brian Mattingley, Chairman of Playtech, also commented: “In recent years, Playtech has successfully repositioned its world leading gambling technology and operations, expanding in strategically important regulated markets and driving major online B2B revenue growth.
“Whilst the business has made significant progress, most notably in the Americas, Aristocrat’s proposal provides an attractive opportunity for shareholders to accelerate Playtech’s longer-term value.”