Aristocrat’s bid for Playtech fails to win over shareholders

By Mia Chapman Updated
Aristocrat evacuates Ukrainian staff

Australian gaming manufacturer Aristocrat Leisure will need to go back to the drawing board to enter the global real money gaming sector after its planned $4 billion acquisition of UK-based Playtech failed.

The Australian Financial Review reports that heading into the Playtech shareholder vote on February 2, London-based investors and brokers were giving Aristocrat no chance of a successful outcome.

“It is 100 per cent dead,” one close watcher said.

Aristocrat’s stumbling block is the emergence of a large and mysterious block of Asia-based investors, who have bought shares at prices well above the Playtech offer price.

Together, the investors are said to account for more than 25 per cent of the company, and are widely tipped to vote against the transaction.

Exactly what the investors are after is the subject of much speculation in London.

The intentions of recent investors remains unknown

Some traders think the investors want to protect competing gaming interests, while others think some or all of the investors were banking on a larger offer from a rival suitor before things turned sour.

The investors include Vitasoy Heiress Karen Lo and Paul Suen, who is best known for floating the Birmingham Football Club.

Playtech, whose board recommended shareholders accept Aristocrat’s offer, hasn’t found the answers, nor has its suitor.

Aristocrat needed approval from 7 per cent of Playtech shareholders at the meeting, but less than 55 per cent of votes were cast in favour of the deal. 

It was reported that TT Bond Partners, a Hong Kong-based investment firm, could make a last ditch bid for the company.

TT Bond Partners had advised on an earlier bid for Playtech from Gopher Investments, but Playtech’s board has granted a request to release TT from restrictions preventing it from tabling a further offer.

What is Aristocrat’s next move?

Aristocrat raised $1.3 billion in fresh equity to acquire Playtech, so the question is now what does it do with the funds?

The company has a burning desire to get into online rela ,money gaming, which it says is a $90 billion a year market, but it likely needs to find another way.

Aristocrat, advised by UBS, will have to decide whether to stick around Playtech and see whether it can pick out some or all of the business via another bid structure, or move on to other targets.

In late January, JPMorgan analysts said Aristocrat had three options should its bid be rejected; make a higher offer, bid for parts of Playtech, or look elsewhere.

“If Aristocrat is unable to acquire Playtech, management may look towards other platforms and avenues to enter iGaming,” the analysts told clients.

Should it come to a break up, Playtech’s business-to-business division, a platform and technology provider for more than 170 online gaming operators in the RMG sector, is likely to be Aristocrat’s priority.

Share prices of other potential listed targets are also likely to be lower now than in October, given the recent market rout.

Whatever happens, it’s been a bruising affair for Aristocrat, which is generally well regarded by fund managers for its M&A capabilities.

A JKO Play consortium, led by former Formula One team boss Eddie Jordan was interested in the company before it withdrew its offer.

Analysts at brokerage Peel Hunt turned bullish on Playtech’s stock after the company pointed to other merger and acquisition proposals, upgrading it to “buy” from “add” and raising its price target to 700 pence, above Aristocrat’s offer of 680 pence per share.

Back to top