In the second half of October, the Australian gambling machine manufacturer Aristocrat Leisure was announced as the company that is set to acquire the UK online gambling and sports betting software developer Playtech in a deal worth almost AU$4 billion (£2.1 billion). The acquisition deal has been backed by the biggest shareholder of Playtech.
At the time, the announcement resulted in an increase in Australian shares, with the All Ordinaries Index increasing by one/fifth of a per cent, reaching a total of 7,690.
The takeover deal would provide the Australian gambling company with the opportunity to expand into new areas of growth, including real-money gaming (RMG). When making the announcement, Trevor Croker, the CEO of Aristocrat Leisure, said that the combined business would become ideally positioned to encourage sustainable shareholder value in the real-money online gambling market.
In October, it was also announced that the acquisition would be funded with existing cash, new debt and an equity raising worth AU$1.3 billion.
Aristocrat Leisure Says the Takeover Deal Will Be Completed in Q2 2022
Currently, Aristocrat Leisure is one of the biggest public companies in Australia which market capitalisation is almost $30 billion. The Australian gambling operator describes itself as an international “games powerhouse”. It currently operates in more than 90 countries around the world and holds an operating licence in approximately 300 jurisdictions around. Aristocrat Leisure owns a digital business itself.
Playtech, on the other hand, develops content for the global gambling sector, with more than 7,000 people working for the company across 24 countries and 170 global operating licences.
At the time when the acquisition bid was officially announced, it was revealed that the deal was likely to be given the green light to proceed further, as Playtech was rumoured to have instructed its shareholders to vote in favour of the takeover. After the announcement of the agreement, the beginning of December saw the Australian gambling company make an announcement that its almost AU$4-billion deal to take over the British gambling software developer Playtech was expected to be finalised over the second quarter of the following year.
As of December 1st, the offer made by Aristocrat Leisure was the only takeover bid for the British sports betting and gambling software provider. In November, the second-biggest shareholder of Playtech – Gopher Investments – decided not to make an offer to acquire the full company.
However, the separate takeover offer of Gopher Investments to acquire Finalto, the financial trading division of Playtech, was given the green light by the company’s shareholders at the beginning of December. Trevor Croker, the CEO of Aristocrat Leisure, made a statement, revealing that the approval provided by Playtech shareholders to the takeover offer for Finalto met a condition of the recommended offer of Aristocrat Leisure. Mr Croker further noted that it was a further step in the acquisition completion process.
Aristorcrat Leisure’s Takeover Offer Values Playtech at AU$5 Billion
According to experts, the acquisition of one of the largest gambling software providers on a global scale would significantly affect the quickly-growing $94 billion online real-money sector. As a result, Aristocrat is expected to grow to a large market player, in addition to its ownership of land-based gambling machines.
The Australian gambling company’s offer to acquire Playtech has valued the online gambling software and content provider, which is listed in the London Stock Exchange (LSE), at a total of AU$5 billion. This is the enterprise value of the company, including the value of Playtech’s stock market capitalisation, the value of its overall issued shares, cash available on Playtech’s balance sheet, and debt.
Under the provisions of the deal, the shareholders of Playtech are set to receive 680 pence per share owned, which equals about AU$12.50. The amount represents a minimum of 66% of the average share closing price of the British gambling software supplier over the past three months, which makes the agreement a favourable one.
As previously reported by Casino Guardian, the acquisition is to be funded through Aristocrat Leisure’s existing cash of AU$1.1 billion, an AU$1.3-billion equity raising, as well as an AU$2.75-billion term loan.
Proposed Deal to Create One of the Biggest B2B Online Gambling Platforms on a Global Scale
What makes the British gambling software developer an attractive acquisition target are its business-to-business (B2B) operations, which include the design, development and distribution of gambling software solutions and service provision to both the retail and online gambling sectors.
On the other hand, there is the business-to-consumer (B2C) vertical of the company, with Playtech operating a number of B2C sports betting and mobile gambling brands, including the Italy-facing online retailer Snaitech.
If the deal is really finalised, it would combine the customer base, regulatory relationships and world-class gaming content of Aristocrat Leisure with the international online real-money gaming platform of Playtech, along with the British software gambling operator’s B2C footprint in Europe. The combined group would have a broad portfolio of end-to-end solutions for gambling customers on a global scale and would be able to offer excellent player experiences.
According to Trevor Croker, CEO of Aristocrat Leisure, the recommended takeover offer is a full and fair value and reflects the strategic potential that a combination of such a large scale would get in the global gambling sector that is vastly migrating online, as a result of constant technology development and customer-driven change.
The CEO of Playtech, Moz Weizer, the takeover deal would unlock a new phase of growth for the company, as it had the potential to enhance Playtech’s capacity to make new and extend its relationships with its partners, to enhance its distribution and last, but not least, to improve its technological capabilities. Mr Weizer shared that the combination of the two companies is expected to result in the creation of one of the biggest business-to-business platforms in the global gambling sector.
The enhancement and growth of the online real-money gambling market have pushed Aristocrat Leisure to start looking for further expansion. Currently, the online gambling industry is worth approximately $94 billion and is expected to grow even more, so it is quite normal for companies to look for opportunities how to better position themselves and make sustainable shareholder value by taking advantage of opportunities in the fast-growing segment.
The online gambling industry grew even more during the coronavirus pandemic due to the lengthy lockdowns and social distancing measures across the world that literally left no other choice for customers than to take their gambling online. The Australian Institute of Family Studies has reported that 78% of Australian gamblers are gambling online. In comparison, that percentage rate was 62%.
- Author
Olivia Cole
