The acquisition that many consider being among the most significant events ever within the Australian gambling industry is drawing close to its finale. However, the $2.9 billion takeovers of online gambling giant Playtech by Australian gambling industry mainstay Aristocrat Leisure has been complicated by the emergence of a third party, the gaming sector consortium JKO Play. With a takeover set to unlock the next phase of growth for the company, Playtech shareholders will soon make their decision.
Regardless of the turbulent road that has brought Playtech here, the end is in sight for the acquisition process. The general meeting to vote on Aristocrat Leisure’s $2.9 billion offer will take place on February 2nd. This date has already been changed twice throughout the process due to the prospect of an incoming bid from JKO Play.
There are reports that many stakeholders plan to vote favorably for the takeover. Among these are Abrdn Plc, the largest active asset manager within the UK. The investment company is within the top 20 Playtech holders. TIG Advisors LLC has also voiced its support, with the two companies already accounting for nearly 4 percent of Playtech shares.
However, there is a significant consortium of Asian investors who are a major holdout. Together, they maintain a 27 percent stake in Playtech, which will significantly affect the results of the February 2nd vote. It is not yet clear in which direction this group will vote, and this uncertainty is a cause for concern among many stakeholders.
JPMorgan, the American investment bank, has stated that they believe the deal won’t go ahead. If the deal does fail, Playtech could see the company break up. However, Aristocrat could always form another bid, or another third party could emerge.
The uncertainty that Playtech now finds itself in is in large part due to the emergence of another potential offer. JKO Play is a consortium that makes investments and acquisitions within the gaming sector. It’s headed by Eddie Jordan, the renowned Formula 1 team owner. After expressing interest in a potential bid, the UK Takeover Panel gave the consortium until January 26th to make their offer.
In early January, JKO Play approached Playtech with a prospective offer. Playtech had initially planned to vote on the offer from Aristocrat Leisure on January 12th but delayed the vote to its current scheduling on February 2nd. However, JKO Play ultimately abandoned the prospect of bidding on Playtech. In fact, sources say that it was the uncertainty presented largely by the indecisive Asian investors that cast doubt on JKO Play’s potential bid.
This development came after a similar potential offer failed to materialize from Gopher Investments. This investment firm currently owns nearly 5 percent of Playtech’s shares. They are also the firm that purchased Finalto, the financial services division of Playtech that was sold off ahead of the anticipated acquisition by Aristocrat Leisure. However, Gopher Investments quickly retracted their interest once JKO Play emerged as a potential buyer.
Now, the only offer left standing for Playtech is that from Aristocrat Leisure. The Australian gambling machine manufacturer has been in the process of acquiring Playtech for some time. In August 2021, Aristocrat announced plans to acquire Playtech for $2.9 billion.
Aristocrat is expanding its operations in the online gambling market and has high hopes for the Playtech acquisition. This isn’t their first move into the sector, having already invested in the online sports betting startup Simplebet. The company maintains that its offer is fair and points out the substantial period of time that other bids have had to come forward.
The acquisition would allow Aristocrat to take advantage of the rapid loosening of online gambling restrictions around the world. Many countries have seen restrictions softened or lifted over the past several years. They would also be able to capitalize on all-time high online gambling rates that have been a result of the COVID-19 pandemic.
There has been significant discussion around a potential breakup of Playtech should the deal fail to go through. While the Board of Directors of the company continues to assert that the Aristocrat Deal is in the best interest of shareholders, some analysts believe that the company would indeed fetch a higher valuation through restructuring.
Playtech is among the most significant players in gambling worldwide. The London Stock Exchange-listed company is the world’s largest online gaming and sports betting software supplier. Its acquisition could have serious ramifications for gambling industries across Australia, the UK, the US, and abroad. Companies around the world are anxiously awaiting the February 2nd decision.