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Playtech investors hit the jackpot as Australia’s Aristocrat unveils £2.7 billion takeover bid

·3-min read
Aristocrat makes slot machines, many of which end up in Las Vegas (AP)
Aristocrat makes slot machines, many of which end up in Las Vegas (AP)

Playtech has become the latest London-listed gambling company to be targeted for a takeover, as operators rush to build scale and break into the US market.

Shares in Playtech surged almost 60% today after Australian gambling group Aristocrat unveiled a £2.7 billion bid for the business.

Aristocrat is offering Playtech investors 680p a share, representing a 58% premium to Friday’s closing price. Playtech’s board is backing the approach. Shares rose 249p to 679p.

Aristocrat’s offer is its fourth bid for Playtech but the first to be made public. The Australian company initially made an unsolicited approach in April.

The deal comes as gambling companies rush to take advantage of the de-regulating gambling market in the United States, which is forecast to become one of the biggest betting and gaming markets in the world.

Trevor Croker, CEO of Aristocrat, said the deal would “unlock sustainable shareholder value by seizing opportunities in the fast-growing global online RMG [real money gaming] segment as they continue to open up, particularly in North America.”

Aristocrat traces its roots back to the 1950s when it began life as a manufacturer of slot machines. The company still makes them — many bound for Las Vegas — but over the last decade it has transformed itself into an online gambling business through a series of deals.

The company now makes over half of its revenue from selling betting and gaming technology and content to other businesses. The business is listed on Australia’s stock exchange with a market cap of A$30 billion and has 6,500 employees across over 80 countries.

Playtech, founded in 1999, builds white label gambling tech but has a significant consumer-facing business through its Italian division Snaitech, which operates betting shops and online gambling websites.

Playtech’s chair Brian Mattingley said the Aristocrat deal “provides an attractive opportunity for shareholders to accelerate Playtech’s longer-term value.”

CEO Mor Weizer said: “This deal has the potential to enhance our distribution, our capacity to build new and deeper relationships with partners, and bolsters our technological capabilities.”

Investors holding just over 20% of Playtech’s stock have already backed the bid and Peel Hunt said shareholders were likely to approve the sale.

Shares Playtech peaked at 959p in 2017. It has struggled with profit warnings and the impact of the pandemic since then.

“In recent years Playtech has had to contend with increased competition, regulatory changes and, of course, a global pandemic,” said Russ Mould, investment director at AJ Bell.

As well as online casino tech, Playtech builds technology for financial trading. It is currently spinning off that division, Finalto, and the Aristocrat takeover is conditional on that sale going through.

“The business had become a little unfocused and untidy, however it has been in the process of streamlining its operations which, ironically, may only have made it a more attractive morsel for Aristocrat,” Mould said.

The Playtech takeover is the latest in a string of gambling deals on the London market. Earlier this year Caesars Entertainment completed a £2.9 billion takeover of UK bookmaker William Hill and both MGM and DraftKings have tried to buy Entain, the owner of Ladbrokes and Coral.

“It may not be popular with ESG investors but gambling is an area in which the London market clearly excels, reflected in the covetous glances UK-listed firms have attracted in recent months from overseas bidders,” Mould said.

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