Australia’s Aristocrat Offers $2.9bn For UK Gaming Company Playtech

Australian slot machine manufacturer Aristocrat Leisure Ltd is making a move on British online and land-based gaming content provider Playtech Plc. They are offering A$3.9 billion, or approximately $2.9 billion to acquire Playtech.

The offer constitutes an additional 58 percent to Playtech’s last closing price. It also implies that the deal has an enterprise value of AU$5 billion.

Aristocrat has already informed the Australian Securities Exchange (ASE) of its bid for Playtech. The company told the government agency that the deal will add 50 percent to its land-based gaming market. Playtech’s business includes offshore and onshore online sports betting, as well as casino games, poker and bingo.

Trevor Croker, who serves as Aristocrat’s chief executive, recently commented on the offer. He says that the deal will be bringing together their company’s world-class gaming content with Playtech’s leading global online real-money-gambling platform. This may combine Playtech’s various real-money-gambling businesses worth $70 billion, with Aristocrat’s own addressable land-based market worth $150 billion.

Aristocrat not only manufactures slot machines, but also has its own video lottery terminal (VGT) business and casino content. The company also has its own mobile gaming brands, such as Big Fish, Plarium and Product Madness together valued at US$80 billion annually. This means that once it completes the Playtech deal, Aristocrat’s total addressable market would be close to $300 billion each year.

In order to make this happen, the company announced that it will fund the deal with A$1.1 billion in cash, as well as an additional A$2.8 billion from a new long-term loan and an entitlement offer of A$1.3 billion. It would also issue over 31.1 million new shares under the new entitlement offer.

Aristocrat expects to complete the transaction by the second quarter of 2022, though the deal will still go through various processes, including getting approval from gaming and financial regulators.

The company expects that the acquisition will gradually increase its earnings per share within the first year. In addition, Aristocrat also said that the entitlement offer will provide the fairest structure for their shareholders. Retail investors and security holders must act quick though, as the entitlement offer’s closing date is on November 8.

PlayTech Board In Favor Of Deal

Aristocrat said the Playtech board has recently recommended the deal unanimously. The offer would value all of the company’s issued and still-to-be-issued share capital at around GBP2.1 billion, or approximately $2.9 billion.

Playtech’s adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) is also increased by a valuation multiple of 11.4 times thanks to the acquisition.