Aristocrat's £2.7bn takeover of Playtech on the verge of collapse

Aristocrat’s proposed acquisition of London-listed supplier Playtech looks set to collapse ahead of a shareholder’s meeting later today.

Playtech said that based on proxy votes received to date, the minimum threshold of 75% needed to approve the deal would not be reached.

The supplier said that if that remains the case after the final vote count the proposed deal will not proceed.

However, the firm noted that it had been evaluating “attractive M&A proposals” from other firms in relation to its B2B and B2C businesses, with those bids also subject to shareholder approval.

The potential collapse of the deal represents yet another twist in the tale of the long-protracted battle to acquire Playtech, which saw Aristocrat challenged by two rival firms since agreeing a £2.7bn all-cash deal in October 2021.

The Australian firm faced competition from both Gopher Investments and Eddie Jordan-led JKO Play, with the latter even being given an extension on its formal bid deadline in January as it anticipated to make a move.

However, JKO pulled out of the bidding in late January, seemingly leaving the path clear for Aristocrat to complete the deal.

The first murmurs of discontent surfaced after it was alleged a small group of Playtech shareholders were looking to block the deal, with a number of large stakeholders based in Asia who did not feel the deal represented value for money.

Reacting to the deal’s potential collapse, Aristocrat said that it understood the majority of votes cast via proxy were in favour of the acquisition but would fail to meet the 75% threshold.

The company went on to note that the majority of investors who are set to vote against the deal arrived on Playtech’s register after the announcement of the deal, with Aristocrat stating it had “taken every possible step to engage with this group of shareholders”.

Aristocrat CEO Trevor Croker said: “We are disappointed that our recommended offer to acquire Playtech is expected to lapse. Notwithstanding extensive due diligence on Aristocrat’s part, developments since the announcement of our offer have been highly unusual and largely beyond Aristocrat’s control.

“In particular, the emergence of a certain group of shareholders who built a blocking stake while refusing to engage with either ourselves or Playtech materially impacted the prospects for the success of our offer, which had been recommended by the board of Playtech,” he added.

Croker said Aristocrat would continue to focus on alternative M&A efforts despite being knocked back by Playtech shareholders.

Brian Mattingley, Playtech chair, said: “This process has shone a spotlight on the fundamental premium value of Playtech’s businesses. Playtech is the leading technology company in the gambling industry, with an unrivalled quality and breadth of products.

“Snai is the number one sports brand across retail and online betting in the Italian market. In the event that the Aristocrat offer does not proceed, the board is determined to pursue options to maximise value for all shareholders and accelerate validation of that value,” he added.

Peel Hunt analyst Ivor Jones said: “Playtech has announced that it does not expect the Aristocrat offer to be accepted at today’s meetings. It reports that it is evaluating attractive M&A proposals that it has received from third parties.

“It also reports that trading has been exceeding management expectations. In light of this and the recent fall in the share price, we are upgrading our recommendation from Add to Buy and our target price from 680p to 700p,” he added.

Playtech’s share price was largely unaffected by the news, rising to 577.50p in early trading from Tuesday 1 February close of 577p.