The Playtech acquisition saga looks set to continue a while longer after the supplier extended the deadline by which TTB Partners must lodge a formal offer.
TTB Partners, a Hong Kong-based investment consortium, was released from Takeover Code rules preventing it from putting in an offer for Playtech on 20 May.
The group was given an original deadline of 5pm today (17 June) to either announce its firm intention to make an offer for the business, or to declare that it does not intend to put in a bid.
However, the supplier announced this morning that it has extended the deadline for TTB to make an offer until 5pm on 15 July, following a request to the UK’s Panel on Takeovers and Mergers from an independent committee formed of Playtech board members.
Playtech said the extension was requested because discussions with TTB are still ongoing, and “progress continues to be made.”
“At present, the Independent Committee believes allowing additional time for discussions to further develop is in the best interests of the company’s shareholders and other stakeholders,” it added.
Following the announcement, Peel Hunt analyst Ivor Jones reiterated an 800p target price for Playtech shares and told investors: “We take today’s announcement of an extension as an encouraging sign that there may yet be an acceptable bid.”
He added: “A takeover is not the only option open to Playtech to release value, and we reiterate our Buy recommendation and 800p target price.”
Peel Hunt: “We take today’s announcement of an extension as an encouraging sign that there may yet be an acceptable bid.”
Earlier this week, Playtech announced it had received all necessary regulatory approvals for the all-cash, $250m sale of its Finalto financial trading division to Gopher Investments.
That deal is now expected to complete on 30 June, with Playtech describing the transaction as a significant step in its strategy to simplify the group and focus on its technology-led gaming offering.
A successful bid from TTB Partners could see current Playtech CEO Mor Weizer and former CEO Tom Hall secure a significant stake in the business, after it was confirmed in February that the pair had approached the investor group to explore the possibility of collaborating on an offer.
Following that revelation, Playtech’s board of directors formed an independent committee excluding Weizer, to consider all matters relating to any possible acquisition offer from TTB.
Playtech said the new bid deadline of 15 July may still be extended further, but only given the consent of the Panel on Takeovers and Mergers.
Playtech shares are trading higher today (15 June) after the supplier received all required regulatory approvals for the sale of its Finalto financial trading division to Gopher Investments.
The sale was agreed in September last year, with an all-cash price of $250m approved by Playtech shareholders at the firm’s general meeting in December.
In line with the agreement with Gopher, Playtech said it expects the sale to complete on 30 June.
The supplier added that the completion of the transaction is a significant step in its strategy to simplify the group and focus on its technology-led offering as a ‘pureplay’ gambling business across B2B and B2C.
Playtech’s overall business remains a candidate for acquisition, despite a 680p per share offer from Australian supplier Aristocrat collapsing earlier this year.
In the wake of that deal falling through, TTB Partners – which had advised Gopher Investments on its acquisition of the Finalto division – was released from Takeover Code restrictions which would otherwise have prevented it from making an offer for the business.
Peel Hunt analyst Ivor Jones: “Shorn of Finalto, the B2B and B2C arms of the group should be attractive targets in this M&A-driven sector, and we still hope to see a route into the US for Caliente.”
Playtech CEO Mor Weizer, and former director and CEO Tom Hall, were subsequently confirmed to have approached TTB in order to explore the possibility of participating and collaborating over a future offer to buy Playtech.
As a result, Weizer was excluded from an independent committee formed by Playtech’s other directors to assess any M&A proposals at the business.
An update on the Playtech acquisition saga is expected on Friday, which marks the 17 June deadline by which TTB Partners must place a formal bid for the firm, if indeed it chooses to make one.
On TTB, Peel Hunt analyst Ivor Jones said in a note to investors: “We will not be too despondent if no bid emerges – Playtech has been trading strongly but not able fully to set out its investment stall while subject to a bid.
“Shorn of Finalto, the B2B and B2C arms of the group should be attractive targets in this M&A-driven sector, and we still hope to see a route into the US for Caliente.”
Playtech said in its Q1 2022 financial report that “positive progress” had been made in discussions with TTB, but that there could still be no certainty as to whether a concrete offer would be forthcoming.
Playtech CEO Mor Weizer will explore participating in a bid with Hong Kong-based investment fund TTB Partners to take control of the London-listed supplier.
Earlier this month, Playtech announced it had released TTB from Takeover Code restrictions which would otherwise prevent the fund from making an offer for the company.
The fund was previously banned from putting forward an offer under the Code, because it had advised Gopher Investments on an earlier bid for Playtech last year.
But following the collapse of Aristocrat’s 680p per share offer – which had been unanimously recommended by Playtech’s board of directors – TTB was free to make an offer for Playtech on behalf of an investor group.
While no formal proposal has been made, Playtech said any forthcoming offer was likely to be made in cash.
Now, both Weizer and former Playtech director and CEO Tom Hall are confirmed to have approached TTB in order to explore the possibility of participating and collaborating in a future offer.
As a result, the supplier’s board will now form an independent committee consisting of all of its directors, excluding Weizer, to consider all matters relating to any possible offer from TTB and any other M&A proposals it receives.
Playtech was clear in pointing out that this is not an announcement of a firm offer, and that there can be no certainty as to whether Weizer or Hall will participate in the TTB investor group, or that a formal offer will materialise.
TTB was already in the driving seat to acquire Playtech and now looks odds on considering its relationship with the current CEO.
In January, The Times reported that Hall had been acting as a conduit for a group of Asian investors said to be seeking to block Aristocrat’s takeover.
At Playtech’s general meeting in early February, shareholder votes in favour of the Aristocrat deal fell well short of the 75% approval rate required by Isle of Man law, with just 56% in favour.
In a note to investors, Peel Hunt analyst Ivor Jones said: “On balance this is positive; the most knowledgeable participant in the bid process [Weizer] sees a reasonable prospect of TTB’s possible offer being accepted by shareholders.
“On the other hand, a competing bid seems less likely since any competing bidder would struggle to become comparably well-informed about Playtech and, when evaluating a possible offer from TTB, shareholders would have to consider the valuation implications of losing the CEO post a failed bid,” he added.
Hong Kong-based investment fund TTB Partners could pounce for Playtech after shareholders rejected Aristocrat’s proposed 680p per share offer for the London-listed supplier.
Playtech announced in a statement today (3 February) that it has released TTB from Takeover Code restrictions which prevented the fund from making an offer for the business.
Crucially, the release means that TTB is no longer blocked from making an approach for the company for a six-month period. It was previously banned because it advised Gopher Investments on an earlier bid for Playtech last year.
Gopher, which has already agreed to purchase Playtech’s financial trading arm Finalto, pulled out of the running to acquire Playtech in November.
This restriction has now been dropped with the consent of Playtech’s executive board.
At yesterday’s general meeting, shareholder votes in favour of the Aristocrat deal fell well short of the 75% approval rate required by Isle of Man law, with just 56% favouring the deal.
A significant minority group of investors based in Asia had been expected to block the acquisition after refusing to enter into a dialogue with either Playtech or Aristocrat in the period leading up to the vote.
TTB will now be free to make an offer for Playtech “on behalf of an investor group to be formed and advised by it,” according to a statement from the supplier, giving Playtech shareholders hope that a takeover of the company could still occur.
This was reflected in the share price. Early trading saw Playtech’s share price rocket as high as 667p, just shy of Aristocrat’s 680p per share offer price. After a volatile morning, the stock is trading at 647p at the time of writing.
In accordance with Takeover Code rules, the six months following Gopher’s announcement that it would not make a firm offer for Playtech is still considered a restricted period.
As a result, TTB will not be required to specify a deadline by which it will either make an offer or confirm that it does not intend to make an offer, until the restricted period has ended.
If, at the end of the restricted period, discussions between both parties are still ongoing, Playtech’s board will announce that TTB must clarify its intentions by the 28th day following the end of the restricted period. This deadline will be 17 June 2022.
Playtech pointed out that no offer has yet been made and there can be no certainty as to whether the interest will result in an offer. However, any offer that may be made is likely to be in cash, it said.
Playtech was considering a potential carve up of the business after the Aristocrat takeover failed. The TTB interest means it may still avoid that scenario as an acquisition of the entire company could still be on the cards.
London-based investment bank Peel Hunt has reiterated its Buy recommendation and 700p per share target price for Playtech.
JKO Play has pulled out of a bid to buy Playtech, which would appear to make Australian gambling technology provider Aristocrat favourite to acquire the London-listed supplier.
According to the Financial Times, JKO Play – which is headed up by former F1 driver and team boss Eddie Jordan – pulled out of a potential 750p per share offer for Playtech over concerns a group of Asian investors would block the deal.
Aristocrat’s bid of 680p per share (£2.7bn), submitted at the start of December, had already been unanimously recommended for shareholders to accept by the Playtech board.
Interest from JKO saw the UK Takeover Panel extend the deadline for JKO to make a concrete offer for Playtech to 26 January, although it withdrew that interest as of today (21 January).
Playtech acknowledged the withdrawal and is still recommending that shareholders accept the Aristocrat bid in a general meeting on 2 February.
This is despite the fact the offer is below Playtech’s current share price, which has climbed nearly 72% since Aristocrat’s bid was accepted by the board last October due to the competing interest of JKO and Hong Kong-based Gopher Investments, which pulled out of the process in November.
In response to JKO’s retreat, Playtech has urged shareholders to engage with the Aristocrat offer. “The board continues to seek engagement with all of its shareholders regarding the Aristocrat offer,” it said in a statement.
“However, a number of material investors have not to date engaged meaningfully about their views on the Aristocrat offer, including certain investors that have disclosed or taken material positions in the company following the announcement of the Aristocrat offer.
“The absence of customary levels of engagement means that the board is approaching the Court and General Meetings without a clear understanding of whether these shareholders are supportive of the Aristocrat offer.”
JKO is banned from making a new offer for Playtech for the next six months, according to the City Code on Takeovers and Mergers.
Interestingly, the FT reports that JKO intended to sell Playtech’s Italian-facing B2C operation Snaitech to Entain if it was successful in any deal.
Entain, which is already live in Italy via bwin, Eurobet and Gioco Digitale, could be looking to boost market share in the country after rival Flutter acquired Sisal for €1.9bn in December.
London-based investment bank Peel Hunt retained its Hold rating and 680p target price in wake of the news, adding: “The bid process has triggered an intense focus on Playtech’s value and it is clear that there is value to be extracted from Playtech’s interest in Caliente in Mexico and, we believe, from the Italian B2C business.”
Playtech shareholders have sanctioned the sale of its financial trading division Finalto, fulfilling one of the key conditions of Aristocrat’s proposed £2.7bn takeover of the London-listed supplier.
Now the sale of the Finalto has been approved, the business will be transferred to Hong Kong-based Playtech shareholder Gopher Investments in a deal worth $250m.
Gopher last month made a preliminary approach to access due diligence information on Playtech, with a view to making an offer to acquire the whole business.
That announcement was made despite Playtech having already agreed terms with Aristocrat, with Gopher’s separate acquisition of Finalto already well underway.
It was eventually announced that Gopher would not make an offer for the whole Playtech business.
The completed disposal of Finalto was one of the key terms under which Aristocrat made its 680p per share offer for Playtech.
Providing an update to investors, Aristocrat said it was continuing to work with Playtech to complete the recommended acquisition, with the process of seeking the required anti-trust, foreign investment, financial, regulatory and gaming approvals progressing well.
The business still expects to complete the recommended acquisition as planned in the second quarter of next year, it said.
“The approval given by Playtech shareholders to dispose of Finalto meets a condition of Aristocrat’s recommended offer and is a further step forward in the completion process,” said Aristocrat’s CEO and MD Trevor Croker.
“Aristocrat’s offer for Playtech has been recommended by the Playtech board and is the only offer on the table for shareholders.
“We believe that Aristocrat’s offer provides an attractive value and enhanced regulatory and financial certainty for Playtech shareholders, while the combined group will also provide greater opportunities for Playtech employees in a leading global organisation.”
A Playtech shareholder meeting to approve the recommended acquisition has been convened for 12 January, 2022.
Playtech has revealed that Gopher Investments, the 4.97% shareholder in the supplier that was said to be working on an offer to acquire the whole business earlier this month, will not make an offer for the company.
Gopher already held an agreement with Playtech to acquire its Finalto finance division, and the announcement that it will not make a bid for the entire business does not affect the existing agreement, to which Gopher remains fully committed.
The Finalto acquisition is underway and expected to complete in H1 2022, in accordance with the rules of the Takeover Code.
However, Gopher reserves the right to set rules from the Takeover Code aside in certain circumstances.
Gopher may withdraw its offer in the event that the £2.7bn acquisition offer announced by Aristocrat lapses or is withdrawn, if a third party announces a firm intention to make an offer for Playtech, if Playtech announces a ‘whitewash’ proposal or a reverse takeover, or if there has been a material change of circumstances as determined by the Takeover Panel.
A firm intention to make an offer for Playtech may be forthcoming from JKO Play, a company controlled by former motorsport team owner Eddie Jordan, and gaming industry veteran Keith O’Loughlin.
Playtech announced yesterday that the firm had approached it to request access to certain due diligence information, in order to explore terms on which an acquisition offer might be made.
The preliminary approach indicated that JKO was in discussions with Centerbridge Partners LP, among others, regarding the possibility of it providing institutional debt and structured capital funding.
JKO has been provided with access to due diligence information for this purpose, however Playtech said the discussions are at an early stage and ongoing.
“There can be no certainty that JKO’s approach will result in an offer for the Company, nor as to the terms on which any offer might be made,” Playtech said.
Meanwhile, Aristocrat’s original bid for the business has been endorsed by Playtech’s board, and Aristocrat remains committed to completing the acquisition.
The UK Takeover Panel will soon announce the deadline by which any potential bidders must clarify their intentions in relation to Playtech.
Reports suggest that Hong Kong-based Gopher Investments, a minority stakeholder in Playtech, is working on an offer to acquire the business, despite Playtech having already agreed terms on a £2.7bn bid from Aristocrat last month.
Gopher – which is already in the process of acquiring Playtech’s Finalto finance division in a deal worth $250m – holds a stake of almost 5% in the whole business, making it Playtech’s second-biggest shareholder.
It has been revealed that the investor made a preliminary approach to Playtech on 21 October, seeking access to due diligence information with a view to making an offer.
According to Sky News, which released the story on Sunday 7 November, sources said that Gopher’s deliberations were not guaranteed to lead to a formal offer, but that it was looking seriously at the option.
The investor is expected to issue a statement today confirming its interest in bidding for the whole Playtech business.
Playtech’s share price jumped from £7.06 to £7.35 this morning following the announcement, having already rallied from £4.29 to £6.79 in October following the announcement of Aristocrat’s £2.7bn bid for the business.
Aristocrat’s offer valued the business at £6.80 per share – but a series of irrevocable undertakings from Playtech shareholders would be allowed to lapse in the face of any rival bidder offering a price at least 10% higher.
This suggests Gopher would need to bid at least £7.48 per share in order to secure a board recommendation.
The Aristocrat deal is also dependent upon the Finalto sale to Gopher being completed.
It is not yet clear how Gopher would structure an offer for the whole Playtech business, considering it has yet to complete its purchase of Finalto, which was originally expected to be completed in the first half of 2022.
In a statement released today, Aristocrat said: “Aristocrat’s long-term engagement with regulators across key gaming jurisdictions, together with strong financial fundamentals, deep customer relationships and established presence in global gaming markets, positions Aristocrat to complete the transaction as planned in the second quarter of calendar year 2022.”
“Aristocrat believes that this will provide certain value to Playtech shareholders, while the combined group will also provide greater opportunities to Playtech employees.”
It went on to say the UK Takeover Panel will soon announce the deadline by which Gopher must clarify its intentions in relation to Playtech, according to the UK Takeover Code, and that once Playtech has published the Scheme Document relating to Aristocrat’s acquisition of the business, it “urges” shareholders to vote in favour of the deal.