GGRAsia – Aristocrat notes 3rd suitor for takeover target Playtech

Aristocrat notes 3rd suitor for takeover target Playtech

Nov 18, 2021 Newsdesk Latest News, Top of the deck, World

Slot machine maker Aristocrat Leisure Ltd noted in a Thursday filing that a third suitor has expressed interest in acquiring Aristocrat’s current corporate target, gambling software specialist Playtech Plc.

Aristocrat said London-listed Playtech had “received a preliminary approach” from a firm called JKO Play Ltd, “seeking access to certain due diligence information in order to explore terms on which an offer for Playtech by JKO might be made,” and that Playtech had supplied the information in line with the United Kingdom’s Takeover Code.

Aristocrat added: “JKO has indicated to Playtech that it was in discussions with Centerbridge Partners LP regarding the possibility of providing institutional debt and structured capital funding. No financing commitment has been provided by Centerbridge to JKO.”

Australia-listed Aristocrat further noted: “Playtech’s discussions with JKO are at an early stage and there is no certainty that JKO’s approach will result in a firm offer for Playtech, nor as to the terms on which any firm offer may be made.”

In a November 8 filing to the Australian bourse, Aristocrat had acknowledged that Playtech had been approached by Gopher Investments, which has just under 5 percent of Playtech, also seeking information for a possible takeover of the latter.

On October 18, Aristocrat made a circa AUD3.9-billion (US$2.84-bilion) cash offer to acquire all of London-listed Playtech, valuing Playtech shares at GBP6.80 (US$9.177) apiece.

Since close of business in London on October 15, up to market close on Wednesday (November 17) Playtech’s shares have risen 72.6 percent, from GBP4.37, to GBP7.41.

According to U.K. media reports, JKO Play is controlled by Eddie Jordan, previously a team boss in Formula 1 motor racing, and Keith O’Loughlin, a former executive at U.S.-listed casino equipment and digital gaming content provider Scientific Games Corp.

U.K. media said JKO Play’s bid could value Playtech at GBP3 billion, i.e., about US$4.05 billion, or circa 43 percent above Aristocrat’s bid.

A Thursday note on Aristocrat from JP Morgan Securities Australia Ltd, said the emergence of a third suitor for Playtech was a “key negative” for Aristocrat. But analysts Don Carducci and Michael James added that in their view, Aristocrat had the “ability (and propensity) to pay more to close the acquisition”.

Aristocrat said in its Thursday filing that its bid offered “certainty for Playtech shareholders with no contingent value or other complicated structures for shareholders to realise value”.

The Australian slot maker added: “Aristocrat also believes that the combined group will provide greater opportunities to Playtech employees.”

Aristocrat recently conducted a retail and institutional entitlement offer to raise funds toward the cost of the acquisition.

The statement said Aristocrat and Playtech were “continuing to work together to implement the recommended acquisition.

“The regulatory approval process is on track with the timetable previously announced and Aristocrat is focussed on progressing this quickly,” the statement further noted.

The equipment supplier said previously it expected the acquisition of Playtech to be completed in the second quarter of 2022.

On Thursday, Aristocrat reported its normalised net profit after tax and before amortisation of acquired intangibles for the 12-months to September 30 was AUD864.7 million, an increase of 81.4 percent year-on-year.

Fitch Ratings Inc has assigned the ‘BBB-’ long-term issuer default ratings to Aristocrat. The group’s rating outlook was considered “stable”. A ‘BBB’ rating is considered “good credit quality,” with expectations of default “currently low”.

The institution said in a Wednesday report that the rating reflected Aristocrat’s “strong business profile as a global gaming supplier, conservative financial policy and visible de-levering path pro forma for the announced Playtech Plc acquisition.”

Fitch forecast Aristocrat’s gross leverage “to peak at 3.0 times pro forma” for the acquisition of Playtech, and subsequently decline to 2.5 times by fiscal year ending September 30, 2023.

“The Playtech acquisition provides Aristocrat with an immediate foothold in the online real money gaming industry with established, profitable business-to-business and business-to-consumer businesses, which Fitch views positively,” it stated.

(Updated at 9.42am, Nov 19)