Gopher Investments Gets Its Way With Playtech’s Finalto Bid
Gopher Investments going public with a late bid for Playtech’s Finalto financial division worked out perfectly. Playtech accepted Gopher’s US$250 million bid last week. Furthermore, Playtech’s shareholders gave the green light to the sale.
Playtech accepted a lesser US$210 million offer from Barinboim Group in May 2021. Barinboim Group is backed by Leumi Partners Limited and Menora Mivtachim Insurance Limited. Its US$210 million bid came as US$185 million cash, with $15 million deferred for up to two years plus an additional US$25 million on the meeting of specific criteria.
Gopher Investments took the unprecedented step of making its bid public. The Hong Kong-based private equity firm publicly offered US$250 million on July 2, 2021. A Gopher spokesperson revealed the all-cash offer represented a 47% increase on the offer Playtech already accepted.
“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.”
Playtech put the lesser US$210 million Barinboim offer to its shareholders. More than 70% of eligible voters voted against accepting the deal. Such a large majority meant Playtech could not sell Finalto to Barinboim.
Gopher Gets Its Man in H1 2022
Playtech had already agreed to sell Finalto to Barinboim, and had a contract in principle. Barinboim’s representatives are extremely intelligent and inserted a clause forcing an $8.8 million break payment . Playtech owes Barinboim that large sum if it sells Finalto within a year for more than US$200 million. Accepting Gopher’s all-cash US$250 million bid triggers that US$8.8 million compensation payment. Why did Playtech not accept the larger offer in the first place?
Under-fire Playtech CEO, Mor Weizer, thanked Finalto employees for their contributions to Playtech’s cause.
“We are pleased to have successfully reached an agreement with Gopher regarding the sale of Finalto. This transaction delivers on our strategy to simplify the Group to focus on the high-growth B2B and B2C gambling markets.”
“I would like to thank everyone at Finalto for their tremendous contributions to Playtech and wish them every success. We are pleased to recommend this transaction to our shareholders, and we remain well placed to capitalise on the exciting market opportunities ahead, driving sustainable growth for the benefit of all our shareholders.”
Playtech revealed it expects the deal to go through during H1 2022. The deal sees Playtech receive net cash of US$132.2 million. This is the US$250 million sale, less the US8.8 million break fee, plus Finalto’s US$109 million cash reserves that are on Playtech’s balance sheet.
Playtech Releases Half-Year Financials
The money expected from Gopher does not feature on Playtech’s latest financial figures. The company released its half-year report for the six months ended June 30, 2021 to the London Stock Exchange.
Revenue fell 4% compared to H1 2020 but reported post-tax profit went crazy and in the right direction. Playtech made a post-tax loss of €22.1 million (AUD$35.3 million) in H1 2020 but a post-tax profit of €401.9 million (AUD$641.97 million) in H1 2021. The company made superb progress in the United States and Latin America.
“Significant progress in the US saw Playtech launch for the first time in Michigan, the first step in our long-term multi-state partnership with Parx Casino, and regulatory approvals progressed in key strategic states. Structured agreements continue to deliver in Latin America, with strong growth in H1 in Mexico and Colombia, and launches in Panama and Costa Rica. In Europe, we signed a new software and services agreement with Holland Casino and saw Continued growth across a number of existing licensees.”
Playtech shareholders responded positively to both pieces of news. Shares traded at 447.20 pence per share before the financial figures and Gopher bid news. The same shares change hands at 476.40 pence per share right now.
