Gaming sector consolidation: JKO pulls Playtech (PTEC) plans
13:33, 21 January 2022
Shares in gaming software company Playtech dropped 20% in London on Friday after JKO Play, led by former Formula One boss Eddie Jordan and Keith O’Loughlin, withdrew a €2.64bn ($3bn) planned takeover bid.
The move comes after the Financial Times reported Thursday that a group of Asian shareholders in Playtech were against any potential new offer for the company.
“The Board of Directors of Playtech notes the announcement by JKO Play Limited confirming that it does not intend to make an offer for the company and the related press coverage,” Playtech confirmed in a statement on Friday.
JKO also confirmed the offer withdrawal in a separate statement on Friday.
“The Eddie Jordan Family office and Keith O’Loughlin announce that JKO Play Limited, a 0.51% shareholder in Playtech plc, does not intend to make an offer for Playtech,” the group said.
Aristocrat Leisure bid
JKO's approach followed a £2.1bn ($2.86bn) bid by Australia's Aristocrat Leisure, whose 680-pence-per-share offer was recommended by Playtech once again today.
“The Board continues to recommend unanimously that Playtech's shareholders vote in favour of the offer from Aristocrat Leisure,” a statement said.
Aristocrat said it is committed to completing the acquisition “as quickly as possible” while noting regulatory approvals remain “well on track”.
Playtech added: “The Board continues to seek engagement with all of its shareholders regarding the Aristocrat Offer. However, a number of material investors have not to date engaged meaningfully about their views on the Aristocrat Offer, including certain investors that have disclosed or taken material positions in the Company following the announcement of the Aristocrat Offer.”
Aristocrat urged all Playtech shareholders to vote for the acquisition at shareholder meetings scheduled for 22 February.
Meanwhile, JKO said it will to continue to evaluate a number of opportunities in the gaming and associated technology sectors, where it sees exciting growth prospects in a number of international markets, the Irish Times reported.
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Sports betting growth
The interest in Playtech, which was founded in Estonia in 1999, comes as growth in the gaming sector increases – with sports betting expanding in the US and subsequently boosting transatlantic partnerships.
In April last year, New York became the sixteenth US state in three years to allow online gambling.
Growth in the industry has also been driven by enhanced interest in online gambling after online betting boomed during the coronavirus pandemic, with customers playing from home when casinos and betting shops were shuttered.
Industry consolidation
As a result, consolidation takeover proposals have ensued, including DraftKings bid for Entain.
The US fantasy sports betting company abandoned its bid for the UK gambling group after it had offered 2,800p per Entain share. The acquisition would have given DraftKiings access to the Ladbrokes Poker and bwin online betting brands, as well as Coral, PartyPoker and Sportingbet.
US-based MGM Resorts also bid for the British company in January 2021 – with an $11bn offer. Entain turned down several acquisition offers, including MGM’s.
MGM and Entain jointly own BetMGM, a sports betting and entertainment company with exclusive access to all of MGM Resorts' US land-based and online sports betting, major tournament poker, and online gaming businesses.
Recent transatlantic deals that did take place included the acquisition of Britain’s William Hill by Caesars Entertainment, in a £2.9bn ($4bn) transaction earlier last year.
Caesars then sold the non-US assets of William Hill to 888 Holdings, a transaction set to complete by the second quarter of this year.
The company said the acquisition would create a “global online betting and gaming leader” and deliver enhanced sports betting opportunities.
“The acquisition represents a transformational opportunity for 888 to significantly increase its scale, further diversify its product mix and accelerate the upward shift of its revenue growth profile,” the company said.
Another recent deal was Flutter Entertainment’s acquisition of online bingo operator Tombola for £402m (€479m).
Flutter, which owns Paddy Power Betfair and Fanduel, said the deal will diversify its products and enhance its operations in the UK market.
Outlook for 2022
The global online gambling market is anticipated to be valued at more than $92.9bn (£68.23bn) in 2023, according to Statista data.
It noted that the current size of the market is almost $59bn, meaning the sector is forecast to double in the upcoming years.
“Due to factors such as the advancement of technology available (for example smartphones and apps), higher trust of gamblers paying online, and the increasing digitisation of the world, the online gambling market is seeing growth in many regions,” it said.
It also highlighted the legalisation of sports betting in the US by the Supreme Court in 2018.
“Online gambling companies are now able to grow their sport betting sectors, thereby further supporting the market’s growth. Some of the companies that look to benefit from this include the likes of Paddy Power Betfair, the largest global online gambling company, Ladbrokes Coral Group, William Hill and 888 Holdings,” Statista said.
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