Aristocrat’s £2.1 Billion Playtech Bid Rejected

Mihai-Alexandru Cristea 23/02/2022 | 17:53

Playtech’s shareholders failed to ratify Aristocrat’s planned takeover of the company this week. A bid of £2.1 billion was made, with many believing the deal would go through shortly. However, the shareholders decided it wasn’t in the brand’s best interest and rejected it outright.

 

Needing votes from 75% of the shareholders, Aristocrat only managed to secure 55% of the necessary votes, leaving them 20% short of the magical figure. It’s unclear whether the Australian firm will try again or whether they’ll pursue other interests, but the business must wait at least six months to boost its consumer revenues due to UK regulations.

This isn’t the first time that Playtech has been at the centre of a proposed merger. In 2021, several parties attempted to get the deal over the line, including a consortium led by Eddie Jordan, the former team boss of his eponymous Formula One outfit. Gopher, a major industry player based in the Far East, was also reportedly interested.

Trevor Croker from Aristocrat signalled that the deal was going to be kicked into the long grass with a statement released before the result of the vote was codified. In a short and rather blunt release, he said that a “group of shareholders… built a blocking stake while refusing to engage with either ourselves or Playtech.”

Playtech has yet to comment on the matter.

What Has the Reaction Been?

Amid the controversy, there have been a couple of positives for Playtech. The fact that the company’s share value has risen on the back of the news will delight shareholders. Indeed, its price target is now 700 pence, taking it above the 680 pence per share Aristocrat offered in its initial deal.

Quite clearly, the Aussie operator must improve its terms if it wants to add Playtech to its portfolio further down the line.

However, it will face stiff competition if reports of an outside bid are to be believed. Many UK media outlets suggest TT Bond Partners is on the verge of swooping in and taking the business from under the noses of Aristocrat.

TT Bond Partners is an investment company from Hong Kong, and two of Playtech’s ten biggest shareholders, Paul Suen and Stanley Choi, hail from the region. Suen and Choi acquired their shares after the offer announcement was rejected.

Why Is Playtech in Demand?

The truth is that British gambling firms are popular among investment companies. This is because the investors are attempting to double down on the incredible growth the sector has experienced from 2019 onwards. For example, Entain, the parent company of Ladbrokes, was almost purchased by American businesses in 2020 and 2021.

Playtech is an obvious target as it develops online casino games, meaning it can capitalise on the demand by tweaking its supply to match the industry’s needs. It already does this with its online slots, regularly providing some of the top new slots to operators that often receive critical acclaim. The strategy is to release two new titles monthly, combining them with defined graphics, high RTP rates, and several bonus features to incorporate added value into the gameplay, as it has done with The G.O.A.T or Odin’s Gamble. Compared to Playtech’s competitors, this keeps them on a level with Microgaming and NetEnt, two firms that would love to absorb the UK brand’s market share.

Of course, any buyer could boost the production of casino games to sell more to operators that are constantly searching for ways to enhance their customer experiences. The fact that Playtech’s reputation is solid suggests it would result in extra sales and greater profits.

Until the business’ shareholders agree on a deal, we’ll have to wait and see what the outcome will be. They have staved off several bids, so they might do it again if and when another offer is proposed.

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