Breakin’ Up is So Hard to Do – D-Day for £2.7bn Playtech Merger
From bidding war to butcher’s block, the fate of gaming technology firm Playtech is looking increasingly problematic as shareholders prepare to meet this week at an Extraordinary General Meeting (February 2) to decide on an outstanding £2.7 billion (US$3.62bn/€3.24bn) takeover offer from Australian slot machine manufacturer Aristocrat.
For a time, with bids from its second-biggest investor, Gopher Technologies, and former F1 racing boss Eddie Jordan’s investment vehicle JKO Play on the table, it looked as if Playtech was going to sell for up to £3 billion (US$4bn/€3.6bn) — much more than its market value of £1.9 billion (US$2.54bn/€2.28bn).
But now, amid machinations from another minority stakeholder, a China-born businessman called Paul Suen Cho Hung, Playtech directors are talking about chopping up and selling off the company in its constituent parts, broadly speaking its B2B division and Snaitech, its Italian consumer vertical.
Hung, who appears opposed to the Aristocrat sale, is a disruptor with a mixed record.
In 2017 he bought the private Mayfair, London casino Les Ambassadeurs in Hamilton Place for £240 million (US$321.8m/€288.7m). Two years later, in a deal that fell at the last hurdle, he tried to sell it for £130 million (US$174.34/€156.41m).
Hitherto, he’s been best known for the unlikely achievement of floating distinctly unglamorous Birmingham City FC—currently languishing near the foot of England’s second-tier football league–on the Hong Kong stock exchange.
Founded by Cypriot-Israeli billionaire Teddy Sagi in 1999, and now helmed by Mor Weizer, Isle of Man-headquartered Playtech’s market value has halved since 2017.
Yet it still claims to be the world’s largest supplier of online gaming and sports betting software. And a merger with Aristocrat would solidify that B2B standing.
When Hung got wind of the proposed deal he swept the London market and rapidly acquired a four per cent stake in Playtech.
Now he and an alleged cabal of other Asian investors in Playtech control around a quarter of the company’s stock and are said to be adamantly against the merger with Aristocrat.
Playtech’s board, for its part, is threatening to effectively rip the company asunder if they can’t win the Aristocrat vote, which needs at least 75 per cent shareholder approval to pass.
It might be a case of shooting oneself in the foot, or cutting off one’s nose to spite one’s face. But we’ll soon know the answer to the tortured, long-running Playtech take-over saga.
“The board is recommending that shareholders vote in favour of the offer from Aristocrat,” a company source has re-iterated to iGamingFuture.
“Playtech has made significant strategic and operational progress and is in a strong position for the future.
“Aristocrat’s proposal provides an attractive opportunity for shareholders to accelerate the delivery of Playtech’s longer-term value,” affirmed the source.
Certainly, on paper, the Playtech-Aristocrat merger makes perfect sense.
It builds one of the largest B2B gaming firms in the world.
And it supercharges Aristocrat’s move into online gambling, first started in 2013, with the opportunity to mine a rich vein of Real Money Gaming financial space as casual and social games, increasingly, become monetized.
America’s booming sports betting scene also offers the proposed Playtech-Aristocrat Omni-channel, which would operate in 24 countries and 30 regulated jurisdictions with 170 global licensees, tremendous opportunities.
Boosters of the merger are hoping—literally—that they won’t be “Hung” out to dry.