Playtech fails to win shareholder support for deal
Author:
Muhammad Gregory
Aristocrat Leisure’s takeover bid for UK-based Playtech has fallen through after insufficient votes were cast in favor of the deal. Fifty-five percent of the votes cast at the shareholders meeting on the 1st of February were in favor, but this was below the statutory seventy-five percent required. The FTSE-listed company was hoping to get approval for the ￡2.7 billion offer when around seventy-eight percent of shareholders registered a vote
Acquisition bid fails for Playtech but partnership deal with Jockey Club is sealed. ?AndyLeungHK/Pixabay
What happens now?
The Australian-based Aristocrat Leisure had put in a bid to acquire Playtech after it was blocked by shareholders. Playtech is a world-leading gambling technology company that is now considering selling off assets after failing to win shareholder approval for the deal. Their share price rose by 5% after Playtech revealed that they were considering bids from other companies. Playtech was founded in 1999 and employs over 7,000 people in 24 countries.
On 2nd February Sky News reported that Asian-based group TT Bond Partners had approached Playtech. They are currently restricted from tabling an offer, but Playtech’s board is understood to have lifted these restrictions and a revised bid is now expected. The restrictions were in place because TT had advised Gopher Investments for a previous bid. It seems everyone is interested in acquiring Playtech, but their shareholders are playing hardball. The company has been in a febrile state for the past few months.
There was no comment from either TT or Playtech on the latest news.
Shareholder blocking
Playtech has struggled to engage its shareholders in the past couple of weeks. There is reported to be a block of Asian-based investors who are not supporting the management decisions. These shareholders include Chinese businessmen Stanley Choi who acquired Wigan Athletic and Paul Suen who floated Birmingham City on the Hong-Kong stock exchange. Another in this group is gaming mogul Tang Hao. Their activity has been investigated by the UK Takeover Panel to see they are acting as a concert party, but no findings have yet been announced.
Former Formula One team boss Eddie Jordan was deterred from making an offer through his company JKO Play because of this block of investors. It is unclear what direction they would want to take the company in, but all will hopefully become clearer in the coming days and weeks.
Playtech’s board, headed up by Brian Mattingley, confirmed last week that if the bid failed, they would start to draw up plans to sell off its consumer and business operations separately. Including debt, Playtech has an enterprise value of ￡2.5 billion. The global gambling industry has become incredibly attractive to investors after the COVID-19 pandemic. Lockdowns boosted the popularity of online gaming, as people had more time on their hands and fewer social opportunities.
Recent Deals
There has recently been a deluge of corporate deals in the sector. The UK-based William Hill, a longtime name on the high street, was taken over by Caesars Entertainment. Then its British operations were acquired by the London listed 888 Group. Entain, who owns Ladbrokes and Coral, was approached by US gambling giant DraftKings, but the planned bid was abandoned.
Why do deals fall apart?
Brian Mattingley has said that he is not disappointed by the failure of Aristocrat Leisure’s bid because it proved that the company was valuable. The complicated nature of its business has meant that it has been difficult to attract bidders. The business model is complicated because it sells back-end software to gambling companies including for operators in the unregulated Asian market.
Keep on Moving
The setbacks in the boardroom have not prevented Playtech from continuing with its successful business deals with industry partners. They have just signed a five-year international deal with the Jockey Club. On 2nd February, they announced a new five-year partnership.
Under the agreement, Playtech will develop a range of online content for The Jockey Club including Casino, Live Casino, Poker, Virtual Sports, and Bingo to appeal to the broad base of horseracing fans. Playtech’s products and services aim to raise industry standards around responsible business and safer gambling. They also deploy technology using research, data, and artificial intelligence to identify at-risk customers and deliver tailored interventions. The first content from this partnership will be launched in time for the Cheltenham Festival
Playtech committed to developing branded content
James Frendo, Casino Director at Playtech, commented:
“At Playtech, we are committed to developing the most engaging branded content. By partnering with an iconic sporting institution such as The Jockey Club, we can create a full range of exceptional and exciting cross-product content. Partnering with globally recognized brands is a key pillar of our branded content strategy as we look to deliver a unique and engaging responsible gambling experience to our customers.”
Jockey Club delighted to partner with Playtech
Charlie Boss, Chief Commercial Officer at The Jockey Club, said:
“We are delighted to partner with Playtech, whose industry-leading software and expertise will help translate the success of our historic brands into the iGaming market for the first time. Playtech also share our values on putting safer gambling at the heart of their products.”
The Jockey Club was established in 1750 and it is one of the largest sporting organizations operating in the UK today. Horseracing is the UK’s second-largest spectator sport. The Jockey Club operates fifteen racecourses and runs headline events such as the Randox Grand National, The Cazoo Derby Festival at Epsom Downs as well as The Cheltenham Festival.
