Playtech Agrees to Aristocrat Takeover
UK based betting and gaming provider Playtech has confirmed that it plans to accept a takeover bid from Australian gaming producer Aristocrat Leisure. Playtech’s shares rose in response to the news that it would agree to the £2.7 billion buyout.
Aristocrat’s offer is awaiting approval from Playtech shareholders. ©AidanHowe/Pixabay
Enhanced B2B Offerings
Aristocrat’s takeover of Playtech looks set to go ahead, as it seeks to boost its presence in the European gaming market. It has chosen to acquire one of Europe’s leading creators of online casino, poker, bingo and betting software, as it aims to enhance its B2B offerings.
Playtech was founded in 1999 by entrepreneur Teddy Sagi, and in 2001 it launched its first casino products. The company has since grown to become on the of the world’s leading software providers. Playtech is one of only a few top gaming firms to be listed on the London Stock Exchange and the FTSE 250 Index.
Aristocrat Leisure is best known as Australia’s largest gambling machine manufacturer. In fact, the company is second only to International Game Technology as one of the biggest slot machine producers in the world. Since its inception in 1953, it has grown into a company with over 6,500 employees based in more than twenty locations.
In 1996 it was listed on the Australian Stock Exchange, and is ranked amongst the top twenty listed firms based on its market capitalization of AU$29.2 billion. It is licensed to distribute its products in more than 300 jurisdictions and 80 countries. Alongside its electronic gaming machines, it also specializes in casino management systems and free to play mobile games, and is acknowledged as a top-tier mobile games publisher.
Now the company is hoping that its acquisition of Playtech will help to boost its revenues even further by securing its foothold in the European market. It is expected that the all-cash acquisition will be recommended unanimously by the Playtech board. Aristocrat stands to benefit from the company’s wealth of experience in developing software platforms and content for online, mobile and land-based gambling products.
The combination will support Aristocrat’s growth strategy and will enable it to become one of the most powerful B2B platform providers in the industry. In particular, Playtech’s Real Money Gaming experience and platform capabilities will complement Aristocrat’s gaming content.
Growing US Market
In its press release, Aristocrat elaborated on what it aims to achieve from the acquisition. The boost to its iGaming and sports betting market capabilities is estimated to be in the region of $70 billion worldwide. It will also gain new growth channels for its land-based gaming business and content.
Aristocrat is particularly keen to take advantage of the growing North American market, which will deliver medium-term revenue and earnings growth for the company. The addition of Playtech’s technology and platform to its leading gaming content will allow it to make the most of the emerging US sports betting market.
Building on customer engagement and creating connected experiences is also an important priority for Aristocrat. An integral part of the acquisition, Playtech’s Italian Snaitech division, will allow Aristocrat to operate and innovate across multiple European markets and reach a wider customer base. Trevor Croker, Aristocrat’s CEO commented on the acquisition, stating:
“The proposed combination would bring together Aristocrat’s world-class gaming content, customer and regulatory relationships with Playtech’s industry-leading global online RMG 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.”
Croker went on to add that Aristocrat’s £2.7 billion offer is reflective of the strategic potential that the combination offers. Consumers are continuing to drive the gaming sector online, and Playtech’s assets will support Aristocrat as it develops its business to cater to those changes.
The CEO added that the opportunity to combine with Playtech is in line with the company’s approach to investing in medium to long-term growth. On behalf of the company, Croker said that he is excited at the prospect of new opportunities for Aristocrat’s shareholders, customers and players.
Playtech Shares Rise
Aristocrat’s £2.7 billion offer amounts to 680 pence per share and values the business at £2.1 billion on a fully diluted basis. This represents a premium of 58.4 per cent on Playtech’s October 15th closing share price.
According to the Australian firm, GGR from online Real Money Gaming could reach $80 billion in 2021, climbing to $112 billion by 2025. To help fund the acquisition it plans to raise AU$1.3 billion, and investors will be able to purchase new shares at a cost of AU$41.95 per share.
While the deal has not yet been officially confirmed, it is understood to have the support of Playtech’s board as well as its largest shareholder, which holds a stake close to 21% of the company. News of the takeover saw Playtech’s shares rise by 57% to 675p. The deal is expected to be completed during the second quarter of 2022, once approved by shareholders.
Playtech Chairman Brian Mattingley praised the deal, explaining what it would entail for the future of Playtech. While the company has made headway into different markets and bolstered its B2B growth, the proposed combination presents Playtech’s shareholders with the opportunity to bolster the firm’s long-term value. Playtech CEO Mor Weizer was delighted to announce the plans, adding:
“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.”
