Gopher Investments Look To Spoil Aristocrat’s Playtech Party

Gopher Investments has approached Playtech, stirring up rumours of a potential takeover bid to rival that of Australia's Aristocrat Leisure.

Gopher Investments has thrown a spanner in the works regarding Aristocrat’s Playtech takeover. The Hong Kong-based investment company is contemplating its own bid for bid. Gopher Investments made a preliminary approach to Playtech, which Aristocrat confirmed in a statement to its shareholders.

“Aristocrat Leisure Limited notes the announcement by Playtech plc that it has received a preliminary approach from Gopher Investments seeking access to certain due diligence information, which Playtech has provided in accordance with the UK Takeover Code.”

Aristocrat informed its shareholders that the Gopher Investments approach does not necessarily mean a rival bid is incoming.

“There is no certainty that the Gopher Investments approach will result in an offer for Playtech, nor as to the terms on which any offer may be made.”

A rival bid from Gopher Investments could be in the region of £3 billion ($5.52 billion). This is because a series of irrevocable undertakings by Playtech shareholders to accept the offer lapse if a rival suitor offers a price of at least 10% higher than Aristocrat’s bid.

Gopher Investments Holds a Near Five Percent Playtech Stake

Playtech is more than aware of how Gopher Investments operates because the latter is a significant shareholder in the gambling tech giant. Gopher Investments holds a 4.97% interest in Playtech through Cayman Islands-based affiliate called TT Bond Partners. The Aristocrat rival holds more than 15.24 million voting rights, valued at more than £103.6 million ($190.53 million).

The approach for all of Playtech comes almost exactly a month since Gopher Investments and Playtech became embroiled in a public row. Playtech accepted a US$210 million offer from Barinboim Group for its Finalto financial division. Everything began progressing until Gopher Investments made a higher bid. That is nothing new, rival bids happen all the time. However, they rarely make those bids public.

Playtech bowed to shareholder pressure and accepted the Gopher offer. Doing so triggered an $8.8 million break payment to the Barinboim Group. The Finalto deal has not go through yet, casting some doubt on the latest speculation.

Teresa Teague is a partner at TT Bond Partner. She is happy with the acquisition of Finalto.

“As a major shareholder in Playtech, Gopher Investments is please to conclude a transaction delivering value for all shareholders and looks forward to working with the Playtech board and continuing its constructive dialogue to support growth.”

More Consolidation Expected

Gopher throwing its hat into the ring has the chance of starting a bigging war for Playtech. Consolidation has become the norm in the gambling industry with several prominent companies merging.

Caesars Entertainment owns British gambling firm William Hill after Caesars paid $5.27 billion for it. Caesars recouped some of its expenditure by selling William Hill’s non-US assets to 888 Holdings.

DraftKings Inc, another American gambling giant, was prepared to pay $30 billion for Ladbrokes owners Entain Plc. However, DraftKings has since pulled out of any possible deal. Jason Robins, the CEO, Co-Founder, and Chairman of DraftKings explained his decision to withdraw from talks.

“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time. Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term grown plans in the rapidly growing North America market.”

British laws dictate DraftKings cannot place a future bid for at least six months.

There could be some mergers and acquisitions closer to home. Crown got to keep its Melbourne casino licence despite massive failings. This makes it a much more attractive proposition for potential suitors. Likewise, Star Entertainment, once interested in a Crown takeover, made it known it is open to a sale-leaseback deal for its Sydney property.