Aristocrat rival for $3.9bn Playtech acquisition pulls pin

The ASX-listed gaming giant moves closer to taking control of the London-based gambling software firm in a major deal.

Aristocrat Leisure CEO Trevor Croker. In October, he said the company had received ‘irrevocable undertakings from Playtech shareholders’ including from its largest shareholder – which has a 20.7 per cent stake – to vote in favour of the scheme.

Gaming technology giant Aristocrat Leisure appears closer to a $3.9bn purchase after British gambling software group Playtech said a rival bidder had walked away.

The takeover plans had stalled in early January after the London-based target asked for more time to consider interest from Irish businessman and Formula One racing identity Eddie Jordan.

Mr Jordan and his JKO Play vehicle were given until January 26 to advance a bid – which would have come after the Playtech board had recommended shareholders back the Aristocrat offer.

In a statement to the London Stock Exchange on Friday night, Australian time, the company said JKO Play had withdrawn.

In a statement, JKO said: “The Eddie Jordan Family office and Keith O’Loughlin announce that JKO Play, a 0.51 per cent shareholder in Playtech, does not intend to make an offer.”

JKO was advised by Global Leisure Partners, Investec and Avonhurst Legal Services.

While JKO gave no reason for Mr Jordan’s decision to abandon the process, the Financial Times earlier on Friday reported that the businessman was concerned that a bloc of Asian investors who had recently bought into the company would block any proposal.

In a statement, Playtech said it continued to support the Aristocrat takeover offer. “However, a number of material investors have not to date engaged meaningfully about their views on the Aristocrat offer, including certain investors that have disclosed or taken material positions in the company following the announcement,” the statement reads.

Aristocrat said its proposal “remained the only firm offer ... despite the substantial amount of time provided to potential bidders to make alternative proposals”.

“Aristocrat further urges the Playtech board to take all available steps to deliver a transaction with Aristocrat,” the company said, noting Playtech’s comments about the investors who had yet to provide their views on the deal.

Playtech’s share price has risen above Aristocrat’s 680p ($12.38) bid, and has jumped more than 70 per cent since the offer was accepted by the company’s board.

Playtech has also received interest from Hong Kong asset manager Gopher Investments.

Gopher, however, abandoned its bid in November.

Playtech, which was founded by Israeli billionaire Teddy Sagi in 1999, has an option to acquire a large holding in Mexican gaming firm Caliente. Its main business, however, is the provision of online casino and poker rooms, as well as mobile gaming.

Aristocrat lobbed its bid in October, an offer described as “transformational” by local equities analysts. The company engaged Goldman Sachs and UBS as advisers on the transaction.

In October, Aristocrat chief executive Trevor Croker said the company had received “irrevocable undertakings from Playtech shareholders”, including its largest investor – which has a 20.7 per cent stake – to vote in favour of the scheme.

“We acknowledge that it is easy to get caught up looking at the historical earnings and outlook for Playtech and become cynical,” Macquarie analysts wrote at the time the deal between Aristocrat and Playtech was announced.

“With an Aristocrat lens, the opportunity is to monetise its market-leading content within (real money gaming) markets globally and launch a compelling solution in North America with proven technology (Playtech) and strong customer relationships (Aristocrat),” the analysts wrote.

“The total addressable market for global online RMG is sizeable at around $US70bn ($97bn) in 2020, given significant expansion in the past few years. IGaming, which includes casino, live casino, poker, and bingo, represents $US28bn of this (market), while online sports betting ... represents $US41bn,” they told clients.  Aristocrat shares ended Friday down 3.4 per cent at $41.50. Over the last year, however, they have risen more than 33 per cent.

As part of the Aristocrat deal, Playtech agreed to divest its financial trading division, known as Finalto. Gopher has proposed to buy the business for around $US250m.