Aristocrat Finalises $3.9 Billion Playtech Takeover

In a surprise move, Aristocrat Leisure has agreed to pay $3.9 billion to takeover London Stock Exchange listed Playtech Plc. Learn more here.

Aristocrat has finalised a $3.9 billion takeover of London Stock Exchange-listed Playtech in a surprise move nobody expected. ASX-listed Aristocrat is using cash, debt, and equity raising to find the deal.

The takeover offer values Playtech’s shares at 680 pence each, a massive 58% premium on Playtech’s October 15 closing price. Unsurprisingly, Playtech’s shareholders are happy with the deal, which means the takeover should progress smoothly.

“Aristocrat Leisure Limited today announces the proposed acquisition of 100% of Playtech Plc for a cash offer price of 680 pence per share, by way of a scheme arrangement under the laws of the Isle of Man. The offer value’s Playtech’s entire issued and to be issued share capital at approximately £2.1 billion ($3.9 billion) on a fully diluted basis, and represents a premium of approximately 58% to the last closing price of Playtech on 15 October 2021 of approximately 429 pence.

“The acquisition represents a valuation multiple of 11.4x Playtech’s adjusted EBITDA for the 12 months ended 30 June 2021.

“Playtech’s Board considers the terms of the takeover to be fair and reasonable and has unanimously recommended that Playtech shareholders vote in favour of the scheme. Playtech directors who own Playtech shares have irrevocably undertaken to vote in favour of the scheme.

“Aristocrat has received letters of intent or irrevocable undertakings from Playtech shareholders, including from Playtech’s largest shareholder, to vote in favour of the scheme in respect of a total of approximately 63.4 million shares, representing approximately 20.7% of Playtech’s outstanding shares.”

How Is Aristocrat Funding the $3.9 Billion Takeover?

Few companies have $3.9 billion tucked away for a rainy day, and Aristocrat is not one of them. However, it does have $1.1 billion in cash that it is using for this takeover. Aristocrat is borrowing $2.8 billion for the rest of the transaction. While this pushes the company’s debt upward, net debt to EBITDA remains less than 2.5-times.

A new share issue will raise $1.3 billion. Existing shareholders are offered new shares at an 8.6% discount. Aristocrat expects the offer will prove popular, especially as the new combined company will enjoy massive revenues once the takeover completes.

Aristocrat gave its investors a trading update in its ASX statement. Unaudited figures show an increase in revenue from $4,139 million to $4,730 million. In addition, EBITA increased from $1,089 million to $1,540 million. Likewise, net profit after tax soared to $864 million from $477 million.

Playtech Shares Surge To Three-Year High

Playtech shares surged 57% after the takeover news broke, taking them to a three-year high. Shares closed at 675.5 pence per share when London trading closes, 4.50 pence short of Aristocrat’s offer.

Brian Mattingley became Playtech’s chairman recently following a move from 888 Holdings. Mattingley called the takeover bid an attractive opportunity for shareholders.

“In recent years, Playtech has successfully repositioned its world leading gambling technology and operations, expanding in strategically important regulated markets and driving major online B2B revenue growth. Whilst the business has made significant progress, most notably in the Americas, Aristocrat’s proposal provides an attractive opportunity for shareholders to accelerate Playtech’s longer-term value.”

Yet Another Gambling Company Deal

Aristocrat’s $3.9 billion takeover of Playtech chalks up yet another gambling transaction. Flutter Entertainment acquired The Stars Group in 2020 for $9.28 billion, increasing the might of an already huge gaming company.

Caesars Entertainment paid $5.27 billion for British gambling firm William Hill in September 2020, which sparked a rush for William Hill’s non-US assets. 888 Holdings won that particular battle.

This is not the end of takeover deals with Bally’s Corp has its sights firmly set on Gamesys Group Plc. Furthermore, DraftKings Inc is prepared to pay almost $30 billion for Entain Group. Entain owns Ladbrokes among many other top-tier brands.

In addition, Crown Resorts could be up for sale in the near future once the government decides what action to take following the royal commission completion. Star Entertainment is open to the idea of a sale-leaseback deal for its Sydney property. However, it is under regulatory scrutiny