Australian slot machine maker Aristocrat Leisure Limited has undertaken an effort to acquire online casino game maker and platform provider, Playtech plc in a bid worth AU$5b (US$3.7b). In a filing with the Australian Stock Market ASX, the company listed the enterprise value of the recommended cash offer at A$5b which would be a 58% premium on the value of all stock based on the last closing price on the market.
The Board of Playtech has unanimously recommended that shareholders vote in favor of the offer of 680 pence per share. Closing price on Friday October 15 was 429 pence.
Putting their money behind the recommendation to other shareholders, Playtech Directors who own shares have taken an irrevocable vote in favor of the offer.
Aristocrat has letters of intent from top shareholders, including Playtech’s largest shareholder (presumably T. Rowe Price) to deliver about 63.4 million shares which would represent 20.7% of all outstanding shares in Playtech. While it’s often a seesaw or tug of war for top shareholder, American investment giant T. Rowe price surpaased company founder and usual top shareholder Tedi Sagi in March 2018.
The acquisition will be funded with existing cash ($1.1b), a new Term Loan B issuance of about $2.8b as well as by raising equity (S1.3b).
According to the Australian Financial Review, Goldman Sachs and UBS have entered the markets with A$1.3b raising for Aristocrat. The raising is progressing under a pro rata accelerated renounceable entitlement offer with retail entitlement trading structure.
Brokers at the firms were already at work on raising the capital on Monday morning offering fund managers entitlement discount of more than 8%.
Aristocrat stated that the acquisition would accelerate the Australian gambling giant’s growth strategy in the mid-term and deliver sustainable value to shareholders.
Capturing Lucrative EU Online Markets
Aristocrat initially entered the iGaming market with the release of a few of their more popular land based titles in 2011. The slots were converted for online play by NextGen, another Australian slot developer. NextGen is now part of Scientific Games through Sci-Games acquisition of NYX on the heels of NYX acquiring NextGen.
The break into controlling an entire platform and decades of content creation could open valuable online European markets for Aristocrat without any conflict with other channels. Snaitech Group, Playtech’s Italy-facing B2C gambling business is seen as an important element in that respect.
Aristocrat CEO Trevor Croker said: “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 platform 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 online RMG segment as they continue to open up, particularly in North America.
“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 deal is conditioned on approval by a majority of Playtech stockholders representing at least 75% of the full value of all shares as well as traditional and customary regulatory approvals.
Aristocrat stock trading on the ASX was halted prior to the announcement and will resume on 21 October upon completion of the Entitlement Offer’s shortfall backbuilds opening and closing over the two days prior.
Source: Aristocrat launches US$2.9 billion bid to acquire online platform provider Playtech, IAG, October 18, 2021
Source: Recommended cash offer for Playtech plc, launch of A$1.3 billion Entitlement Offer and Trading Update, Australian Stock Exchange, October 18, 2021