Playtech forced to consider alternative M&A options as Aristocrat takeover looks set to fall through
Playtech is understood to be negotiating alternative acquisition proposals behind the scenes with Aristocrat’s 680p per share takeover offer for the firm likely to be voted down by shareholders.
The London-listed supplier predicts a minority group of shareholders will vote against the Aristocrat proposal, which has been unanimously recommended by the board, at a shareholder meeting later today (2 February).
Both Playtech and Aristocrat have released guidance suggesting that based on the proxy votes received to date, the majority of votes cast so far have been in support of the acquisition. However, votes in favour are still short of the 75% threshold required to vote through the acquisition under Isle of Man law.
Aristocrat said it understands that despite its offer being supported by the majority of Playtech shareholders, a number of material investors, reportedly based in Asia, have not engaged meaningfully about their views on the acquisition. These investors, it said, accounted for the majority of votes cast against the deal, and are effectively blocking the recommended acquisition.
Based on public disclosures, Aristocrat added, the majority of these shareholders arrived on Playtech’s register and built up an influential position after the announcement of the recommended acquisition.
The company said it has taken every possible step to engage with the investors and progress the acquisition, considering all options including alternative transaction structures.
“We are disappointed that our recommended offer to acquire Playtech is expected to lapse,” said Aristocrat CEO and MD Trevor Croker.
“Notwithstanding extensive due diligence on Aristocrat’s part, developments since the announcement of our offer have been highly unusual and largely beyond Aristocrat’s control.
“In particular, the emergence of a certain group of shareholders who built a blocking stake while refusing to engage with either ourselves or Playtech materially impacted the prospects for the success of our offer, which had been recommended by the board of Playtech.”
Playtech said it remains confident in future prospects despite the potential collapse of the deal and was buoyed by recent trading performance across both its B2B and B2C businesses.
Crucially, it said the board has been considering options for maximising shareholder value in a situation where Aristocrat’s offer does not proceed, including evaluating “attractive M&A proposals from third parties in respect of Playtech’s B2B and B2C businesses”.
These alternative proposals are not offers subject to the City Code on Takeovers and Mergers, the supplier said, but will still require shareholder support
Playtech reiterated to shareholders that no definitive agreements have been reached and negotiations are ongoing with third parties. The supplier could look to cash in on its Italian B2C brand Snaitech, which is reportedly a target of Entain and others.
“Playtech remains in a strong position and continues to perform very well across its core B2B and B2C businesses,” said Playtech CEO Mor Weizer.
“This progress reflects the quality of our technology and products and the hard work and commitment of our talented team. We remain confident in our long-term growth prospects and, in particular, our ability to benefit from the structured agreements (including Caliente) that are already allowing Playtech to access newly opened gaming markets.”
Brian Mattingley, Playtech chairman, added: “This process has shone a spotlight on the fundamental premium value of Playtech’s businesses. Playtech is the leading technology company in the gambling industry, with an unrivalled quality and breadth of products.
“Snai is the number one sports brand across retail and online betting in the Italian market. In the event that the Aristocrat offer does not proceed, the board is determined to pursue options to maximise value for all shareholders and accelerate validation of that value.”
London-based investment bank Peel Hunt issued a note to investors today, changing its recommendation on Playtech from Add to Buy. The note stated that Playtech is evaluating attractive M&A proposals and upgraded its target price from 680p to 700p.
Playtech shares closed at 577p yesterday and opened at 500p this morning before recovering quickly. At the time of writing, shares are trading at 592p, still significantly below both Aristocrat’s 680p offer price and Peel Hunt’s 700p target price.