Playtech revises strategic agreement with Caliplay as legal battle put on hold

Playtech’s shares have soared this morning after the company restructured its agreement with Mexican operator Caliplay, bringing an end to its protracted negotiations with its Caliente Interactive joint venture.

Under the terms of the new agreement, Playtech will hold a 30.8% equity stake in Caliente Interactive, which will serve as Caliplay’s new holding company in the US moving forward.  

Playtech will also be entitled to receive dividends from Caliente Interactive, with the company retaining the right to appoint a director to the operator’s board, should its equity interest remain above 15%.

Playtech is also set to receive a $140m cash payment from the Mexican operator over a four-year period.  

The payment will come via a $12m initial tranche, following by 16 quarterly payments of $8m during the four-year period.

The new deal also includes a revised eight-year B2B software licence and services agreement between Playtech and Caliplay.  

Playtech stated that Caliplay has resumed paying its software and services fees that were owed, with the former receiving 80% of the outstanding balance to the tune of €150m. 

The money has been paid into escrow and will be released when the new agreement is finalised or by the end of 2025 at the latest.  

The new agreement is still subject to approval from Mexican antitrust authorities and is expected to conclude by Q1 2025. 

The ongoing legal dispute between Playtech and Caliplay had been put on hold while the new agreement was negotiated and will be dismissed altogether once the deal officially closes.  

Playtech’s Malta-facing subsidiary Playtech Malta initially launched legal proceedings against Caliplay in February 2023, pertaining to whether Caliplay held an option to redeem an additional services fee element in the original agreement between the two parties. 

The JV claimed that Playtech had initiated the legal action without warning. 

Caliplay responded by taking legal action against Playtech in Mexico in October 2023, with the aim of severing its business relationship with the operator. 

Playtech CEO Mor Weizer said: “During the past nine years, we have worked closely with Caliplay to create a successful and rapidly growing digital business in Mexico.   

“The revised arrangements mark the beginning of an exciting new chapter that will build on the impressive progress to date, with a view to driving significant further growth for Caliente Interactive in the future,” he concluded. 

Elsewhere, Playtech has released a brief H1 trading update in which the London-listed firm said the first six months of the year had delivered a “good trading performance”.

Gains in the B2B division, with “good strategic progress” made in the US and Canada have also led to bosses expecting adjusted EBITDA for the year to be slightly ahead of current consensus.

On the B2C front, Playtech confirmed that discussions between itself and Flutter over the sale of the Snaitech brand are continuing.

Playtech revealed the pair were in negotiations last month follow media reports, with Flutter potentially adding to its existing Sisal brand in Italy.

Playtech’s shares are up more than 7% to 704p at the time of writing, its highest price in the year-to-date.