Aristocrat Acquires Playtech in $ 3.7 Billion: Augmented Deal Picture

Aristocrat Leisure Ltd is a designer and manufacturer of gaming machines and casino products established in 1953. To date, it has grown into a formidable gaming brand with leading-edge innovations and inventions. To cement overall growth, they have acquired other companies related to their speciality. Recently, Aristocrat announced a Playtech acquisition offer. The enterprise-based value of this deal is worth $3.2b/£2.7bn. 

What is known about Aristocrat Leisure Ltd?
Aristocrat Leisure Ltd is a Sydney-based manufacturer of gaming products and best paying pokie machines. It has a foot-hold presence in more than 90 countries. Popular free pokies Aristocrat amaze with their bonuses, features and collect many satisfied users every day. The following games are in particular demand: Lightning Link, Where’s The Gold, Dragon Link with real money no deposit bonuses. It has operated for decades and has executed strategic takeovers to leverage innovation and remain relevant to the dynamic gaming market. 

What is the significance of Playtech PLC in the gambling market?

Playtech is an Isle of Man-registered provider of online gaming software. Playtech is a popular manufacturer of online free slot machines, pokies and casinos. It was founded in 1999 by an Israeli investor Teddy Sagi. After a series of launches in the North American market, Aristocrat’s acquisition of Playtech is strategic to its growth. The company hopes to benefit from Playtech’s existing presence in the US, a market that has relatively stricter entry and operational laws.

Playtech to be purchased by Aristocrat Leisure (deal of large providers of free slot machines with free spins and casino games)

Aristocrat’s Perspectives According to Trevor Croker

Aristocrat’s CEO Trevor Croker opined that this deal would accelerate the sustainable growth of investors’ value by leveraging opportunities in a fast-paced global online gaming business. According to him, this business-to-business deal will help consolidate the company’s unparalleled gaming content with Playtech’s clients and regulatory connections, given the latter’s global competitive edge as a provider of the virtual Real Money Gaming (RMG) platform. Aristocrat is anticipated to profit greatly from Playtech’s B2C footprint in Europe, as well as from Playtech’s excellent pool of designers and web developers. This purchase will likely enhance the existing strengths and technological abilities in the B2B relationships.

What Are The Benefits of This Deal for Aristocrat?

The takeover deal details reveal that Playtech has a per-share value of $9.35. While the value might rise sharply due to the anticipatory demand, Aristocrat management expects to off-load at least A$1.3bn worth of shares to fund this takeover. This deal will scale up their global portfolio, valued at around $70bn. The most significant advantage of this deal is that it gives Aristocrat a strategic lead into entering regions with comparably stricter iGaming laws. Aristocrat will benefit from the expanded iGaming market in North America. It already enjoys a presence here courtesy of acquiring an Italian omnichannel gaming operator, Snaitech, in 2018. Mor Weizer, Playtech’s CEO, pointed out that this deal is mutually beneficial. He said this offer would improve Playtech’s distribution capacities and lead to new and deeper partnerships worldwide. The acquisition would also bolster Playtech’s technological access insofar as gaming is concerned. 

Playtech Shares Soar After Aristocrat Takeover Agreement

Following the announcement of this acquisition, Playtech’s stock jumped by more than 50%. Evaluations reveal that shareholders will get a befitting value of 680p/share. This value growth represents a sharp rise of about 58.4% based on Playtech’s price of 429.2pence per share, the closing price on October 15th, the last trading day before news of this deal went public. Analyzing the rise over even an extended period reveals how existing Playtech shareholders stand to reap big from the deal. For instance, in the three months preceding 15th October, Playtech’s weighted average price/share was 409.7pence. Further analysis of 12 months preceding this deal’s announcement date reveals the weighted average price of each Playtech share was 438.8. Respectively, considering the 680p/share price on 15th October, these represent 66% and 58.4% premium increments.

Aristocrat management did not find a surprise in this sharp rise. Market forecasts always anticipate such instantaneous movements in share prices, especially where big global companies like Aristocrat are part of this deal. Utilitarian capital owners are alert to takeover bids to maximize the gaming portfolio values. Following this anticipated rise, Playtech’s management board is satisfied with the sale and is pushing for a mandatory 75% shareholders’ approval. This approval is planned to occur in this company’s annual general meeting, which is yet to be scheduled.

Interesting fact: Gaming Financial experts reckon that deal will culminate into one of the biggest business-to-business platforms in the global gaming industry. Aristocrat is expected to raise quite a considerable percentage of an agreement through share sales which are expected to be off-loaded at an 8.6%. 

Gopher Investments’ Competitive Rate on Playtech Takeover

After the announced Playtech takeover bid by Aristocrat Leisure Ltd., Gopher Investments has expressed interest. This company is planning to outcompete Aristocrat in acquiring Playtech. Gopher Investments confirmed that ongoing evaluations of this deal are underway with Rothschild & Co. as their adviser. Details indicate that Gopher is willing to offer £3bn to counter Aristocrat’s £2.7bn. While negotiations of this deal are at infant stages, Playtech has confirmed Gopher’s interest, adding that Gopher had been granted a request to access Playetch’s due diligence reports to explore information that may be vital to the prospective deal. There is non-commital from Playtech’s top management as to whether early negotiations will result in an agreement. Gopher might pose as a serious competitor in this takeover’s dealings.

As fact: In September, Gopher Investments showcased its financial muscle when it committed funds to a tune of US$250 million in a bid to acquire Playtech’s trading division, Finalto. Before the deal conclusion, an Israel-based company, Barinboim Group, had proposed an offer of US$210 million, an agreement that Playtech’s shareholders vehemently declined. TT Bond partners (an affiliate of Gopher) nonetheless played a pivotal role in pushing the acquisition of Finalto by Gopher. As if to signal ongoing discussions concerning Playtech’s deal, TT Bond partners argued that they were closely engaged in constructive dialogue with Playtech’s board to ensure sustained growth. 

Aristocrat Fights for Playtech as Gopher Is Coming

Barely a month ago (October 2021), Aristocrat announced that it had reached a deal to acquire Playtech. This deal is worth £2.70bn/€3.15bn/$3.64bn based on the enterprise value calculations. Everyone knows that these large producers of free slots to play with real money with no deposit bonuses are popular among users. According to the Sky News reports, Playtech’s minor shareholder, Gopher, might be planning to upstage Aristocrat with an offer of £3.0bn. Playtech confirmed that it received an offer from Gopher days just after agreeing on terms with Aristocrat. Details are also emerging that Aristocrat’s deal may be dependent on numerous conditions. These conditions include shareholders’ green light regarding the sale of Finalto (Playtech’s financial trading entity), which Gopher owns. While responding to this news, Aristocrat is highly optimistic that a deal was conclusive. Aristocrat argues that an agreement resulted from rigorous and robust engagements between these two companies, which started as early as April 2021. Aristocrat also believes its reputable and long-term arrangements with critical global regulators and strong financial muscle will help it conclude this deal in the early months of 2022.

Aristocrat and Playtech Are a Great Duo

Aristocrat takes pride in decades-long experience in the manufacture of gaming software and related products. Currently, it is one of the most significant forces in the global gaming industry. It boasts of presence in at least 90 countries and 300 jurisdictions. Aristocrat is Inspired by its rallying call, which is ‘to afford players ultimate joy through the power of play.’ Besides, Aristocrat’s workforce is powered by innovative approaches such as ‘thinkBIGGER’ innovation enabler that roots for a team and collaborative approaches among its more than 6,000 employees globally. Aristocrat taps the best of talent to remain technologically competitive while supporting initiatives geared towards producing leading-edge Aristocrat games.

What was the Aristocrat’s path to success?

Aristocrat’s journey is laden with strategic takeovers and pioneer inventions and innovations. For example, in the 1950s, this company introduced revolutionary self-lubricating reels and a free play lock for Aristocrat slot machines for sale. The latest acquisition before the Playtech deal announcement was that of Big Fish in 2018.  Popular free Aristocrat slots have been actively used by users for several years now. This acquisition consolidated Aristocrat’s position as one of the best free-to-play desktop and mobile games suppliers. Aristocrat’s acquisition of Playtech will make it popular in North America and Europe, where it has been assessing entry plans. By any evaluation method, Aristocrat is a global giant in the manufacture of gaming and best paying online casino software. Currently, it has enjoyed a massive market capitalization of about AU$292bn /£15.8 bn. Through Playtech’s takeover, Aristocrat will consolidate its position as a global leader in an industry that Zion Market Research insights indicate will be worth $179bn by 2028. Aristocrat is also optimistic that the Playtech acquisition will boost its revenue streams from the North America Real Money Gaming (RMG) market. In addition, Aristocrat will gain entry into Europe through Playetch’s Italian-based subsidiary Snaitech.

Aristocrat Leisure Ltd & Playtech a Successful Companies on Stock Market

Stock markets are instantly responsive to takeover bids among listed companies – Australia’s Aristocrat Leisure Ltd, which trades as ALL.AX at the Australian Stock Exchange (ASX) announced its proposal for a Playtech takeover in October. Resultantly, Playtech shares (PTEC.L), as listed under London Stock Exchange, went up by 57% and traded at 6.5 pence which is short of the planned offer price of 680 pence/share. This deal is yet to reach its conclusive end, but Aristocrat is determined to finalize everything by the first quarter of 2022. On its side, Playtech says there are significant hurdles, although it has been approached by Gopher that is seeking to give a better deal. Nonetheless, Playtech argues that its largest single shareholder (21% stake) has agreed to this sale. The company is also pursuing other shareholders to agree to this deal as they will be well-placed to partner with a global giant in the digital gaming market.

Note: When a whole deal sails through, Aristocrat plans to fund this process with around US$816 million liquid cash asset, US$2.05 long-term financial loan, and US$965 by equity capital raising, via an entitlement offer. Besides, this takeover is expected to yield lucrative returns to the combined business share prices. Before synergies, the per-share value growth is projected at low to medium single digits range while post synergies are expected to be mid-to-high single-digit growth.