Australia-listed slot machine maker and online gaming content provider Aristocrat Leisure Ltd has made a circa AUD3.9-billion (US$2.9-bilion) cash offer to acquire all of London-listed Playtech Plc, a leading gaming content provider for the online and land-based casino industries. The cash offer represents a premium of approximately 58 percent to the last closing price of Playtech, and the deal implies an enterprise value of AUD5.0 billion.
Aristocrat said in a Monday presentation at the time it announced the bid to the Australian Securities Exchange, that the Playtech deal could be complementary by nearly an additional 50 percent, to its own land-based gaming addressable market.
Aristocrat chief executive and managing director, Trevor Croker, was quoted saying in one of several Monday filings on the matter: “The proposed combination would bring together Aristocrat’s world-class gaming content and customer and regulatory relationships with Playtech’s industry leading global online real-money-gambling platform – business-to-business – and European business-to-consumer footprint.”
The company said it expected the acquisition to be completed in the second quarter of 2022, “subject to certain antitrust, foreign investment, gaming regulatory and financial regulatory consents and approvals being obtained.”
The deal would be funded with AUD1.1 billion in existing cash, new debt consisting of a AUD2.8 billion term loan, and a AUD1.3 billion entitlement offer. Under the entitlement offer, Aristocrat would issue up to just over 31.1 million new shares.
Aristocrat said it expected such an acquisition would be earnings per share “accretive” in the first year.
The Australian group said the underwritten pro rata accelerated renounceable entitlement offer with rights trading would “provide the fairest possible structure for Aristocrat shareholders”. The closing date for the entitlement offer for retail investors and security holders would be November 8.
The offer values Playtech’s entire issued and to be issued share capital at approximately GBP2.1 billion (AUD3.9 billion) on a fully diluted basis.
The acquisition represents a valuation multiple of 11.4 times Playtech’s adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for the 12 months to June 30.
The Playtech board has unanimously recommended the deal, according to Aristocrat.
Aristocrat also said in its Monday announcements, it expects 2021 full fiscal year net profit after tax and amortisation, of AUD864 million.
Aristocrat noted that a consumer shift to online play was a “trend accelerated by Covid-19”.
Aristocrat assessed that Playtech had a US$70 billion real-money-gambling business made up of offshore and onshore online sports betting, casino play, poker and bingo. Aristocrat says its own addressable land-based market – including its VGT video lottery terminal business, casino content, and gaming machines, is US$150 billion.
Aristocrat further assessed that when its own Plarium, Product Madness and Big Fish mobile gaming brands were taken into account, they were worth US$80 billion annually, meaning the Playtech deal if completed, would take the Aristocrat group’s total addressable market to US$300 billion annually.
