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Aristocrat to buy gambling giant in $4B deal

On Monday, Aristocrat Leisure announced a $3.9 billion takeover of gambling software company Playtech to be funded from its own coffers, a direct loan, and an entitlement offer.

Playtech is a leading technology provider that develops platforms and content for the global gambling industry. It is considered by Aristocrat to be one of the world's largest online gambling software suppliers and has built a strong track record of pioneering content, software, and platform technology development for the gambling industry. Playtech has more than 7,000 employees across 24 countries, 170 global licensees and is regulated in 30 jurisdictions.

Operationally, Playtech consists of two key business segments: Business-to-Business gambling and Business-to-Consumer gambling. Playtech’s B2B gambling operations include the design, development, and distribution of software and services to the online and landbased gambling industry. It covers all key online real-money gaming segments, including casino, live casino, poker, bingo and sports betting, monetising via a revenue share model. Playtech’s B2C gambling operations predominantly consists of Snaitech (Italy), a vertically integrated retail and online business leveraging Playtech’s proprietary technology and capabilities.

The proposed acquisition values Playtech’s entire share capital at approximately £2.1 billion, representing a premium of approximately 58% to the last closing price of Playtech on 15 October 2021 of approximately 429 pence. The acquisition also represents a valuation multiple of 11.4x Playtech’s adjusted EBITDA for the twelve months ended 30 June 2021.

The Aristocrat Board believes that the acquisition will accelerate Aristocrat’s growth strategy and deliver strategic benefits. In particular, it will:

  • provide Aristocrat with material scale in the ~US$70 billion online RMG segment, offering new, complementary growth channels for Aristocrat’s gaming content;

  • deliver medium-term revenue and earnings growth, in particular in the fast-growing North America online RMG segment, combining Aristocrat’s industry leading gaming content and long-term customer and regulatory relationships with Playtech’s technology and platform;

  • enable Aristocrat to meet a broader range of customer and player needs and deliver new and connected experiences through Aristocrat and Playtech’s combined distribution, technology and content, unlocking additional value across Aristocrat’s portfolio and deepening customer engagement;

  • through Playtech’s Snaitech business, enable Aristocrat to operate and innovate in multiple European markets, across the entire value chain and free of channel conflict; and

  • deliver attractive financial returns, with the acquisition expected to be EPSA accretive in Aristocrat’s first full year of ownership.

Aristocrat confirmed that the Playtech Board considers the terms of the acquisition to be fair and reasonable and has unanimously recommended that Playtech shareholders vote in favour of the scheme. While Playtech directors who own shares have also irrevocably undertaken to vote in favour of the scheme.

Aristocrat CEO and Managing Director, Trevor Croker, said: “The proposed combination would bring together Aristocrat’s world-class gaming content and customer and regulatory relationships with Playtech’s industry-leading global online RMG platform (B2B) and European B2C footprint. The combined group would offer a broad portfolio of end-to-end solutions for gaming customers around the world, as well as seamless player experiences, underpinned by a shared focus on responsible gameplay and innovation. Additionally, the business will be ideally positioned to unlock sustainable shareholder value by seizing opportunities in the fast-growing global online RMG segment as they continue to open up, particularly in North America.”

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