Playtech Under Pressure After Public Finalto Bid

Playtech's Finalto division is subject of a bidding war

Playtech finds itself in a difficult position after Hong Long-based private equity firm went public with its US$250 million bid. Gopher Investments publicly offered US$250 million for Playtech’s Finalto financial division before the weekend. Playtech has already accepted a lesser US$210 million offer.

The London Stock Exchange-listed software developer revealed the US$210 offer for Finalto in late May 2021. Finalto, formerly known as TradeTech, looked set to head to a Tel Aviv-based consortium.

Barinboim Group, backed by Leumi Partners Limited and Menora Mivtachim Insurance Limited, offered US$210 for Finalto. $185 million cash, with US$15 million deferred for up to two years, makes up the deal. An additional US$25 million is due when specific criteria are met.

Under fire Playtech CEO, Mor Weizer addressed investors via press release to the London Stock Exchange.

“Playtech has a stated strategy to simplify the Group and today’s announcement is the conclusion of a two-year process in which Playtech has explored all routes to maximise value and certainty for shareholders from Finalto.

“The sale also offers a good outcome for all stakeholders in the Finalto Business, providing certainty for colleagues, customers, and trading counterparties. The Consortium has a deep understanding of the Finalto business and the markets in which it operates, and we wish our colleagues every future success.”

Last Ditch Finalto Offer Throws a Spanner in the Works

Gopher Investments went public with its offer for Finalto on July 2. Furthermore, Gopher urged Playtech shareholders to vote against the rival US$210 million bid at Playtech’s July 15 General Meeting.

The Hong Kong-based investment firm is offering an all-cash US$250 million deal for Finalto. This represents a 47% increase on the bid Playtech accepted already.

“Gopher’s all-cash offer included no deferred or contingent component, delivering full value upfront and allowing Playtech to receive proceeds with certainty and in full on completion. It secures the clean break which the board has declared as an objective of the transaction.”

The new offer was presented to Playtech’s Board on June 29, according to Gopher’s statement. Playtech argued it has limited flexibility to engage with Gopher due to terms agreed to when it agreed to sell.

“Gopher presented its Offer to Monaco’s Board on 29th June 2021 and today received a written response from the Board, in which it stated that it believes that it has limited flexibility to engage with Gopher under the terms of the SPA that it entered into on 26th May with the Consortium which Gopher believes is an unusual constraint to have allowed given the other protections in place. As such, Gopher urges shareholders to vote against the Consortium offer at the General Meeting on 15th July 2021, which will give the Board the ability to consummate a transaction with Gopher.”

Playtech Responds; Is Unhappy With Gopher’s Stance

British business laws bind Playtech because it is listed on the London Stock Exchange. It must disclose any offers receive that can affect its share price or shareholders. Playtech responded to Gopher’s last-minute offer, calling the proposal “unfortunate.”

“The timing at which Gopher has chosen to come forward with its indicative proposal makes it very difficult for the Playtech Board to properly assess the proposal, given the restrictions agreed in the SPA. It is unfortunate that Gopher did not advise Playtech of its interest in acquiring Finalto prior to June 29.”

Gopher telling Playtech shareholders to vote against the deal puts the cat amongst the pigeons. It is by no means unprecedented, but it is rare. It will be interesting to see the voting results, especially as Gopher’s offer looks the more attractive on paper.

Playtech shares finished 3.11% higher at the close of trading on July 2; they are worth 443.80 pence each.