Playtech shares are up 58% on Monday: here’s the catalyst
- Playtech plc agreed to Aristocrat's £2.7 billion takeover proposal.
- Aristocrat to raise £700 million via an equity offer to fund the deal.
- Playtech's board recommends shareholders accept the proposal.
Shares of Playtech plc (LON: PTEC) jumped 58% on Monday after it agreed to be taken over by Aristocrat Leisure Ltd in a deal that gives it an enterprise value of £2.7 billion.
What’s in it for Playtech shareholders?
The acquisition that the Sydney-based gaming content and technology company plans on making via its UK-based subsidiary, Aristocrat Holdings Ltd, offers 680 pence in cash to Playtech shareholders for each share they own, which translates to a 58% premium on the per-share price at which the stock closed on Friday.
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According to Aristocrat, it will raise £700 million via an equity offer next week to fund the deal. The Australian firm will also use its existing £590 million in cash to bring the FTSE 250-listed gaming software development company under its umbrella. The remaining will come from a term loan.
Aristocrat is spending a hefty amount as Playtech offers an opportunity for it to scale up and expand its footprint in the global real money gaming (RMG) market.
Playtech’s board recommends shareholders accept the proposal
Playtech’s board of directors have unanimously recommended that shareholders accept the takeover proposal. Aristocrat’s CEO Trevor Croker is convinced that the combination will create a “true industry leader”. He said:
The business will be ideally positioned to unlock sustainable shareholder value by seizing opportunities in the fast-growing online RMG segment as they continue to open up, particularly in North America. The combined group will offer a broad portfolio of end-to-end solutions and a seamless player experience.
Last month, Playtech reported a 4.0% annualised decline in its H1 revenue but a 13% growth in its adjusted EBITDA.