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Playtech shares surge 55% after agreeing to takeover by Aristocrat

Shares of software provider Playtech jumped 55% to 667p on Monday after announcing that it had agreed to terms to be taken over by gaming giant Aristocrat for 680p in cash.

Playtech – A leading technology provider for the global gambling industry

Playtech, founded by Sagi in 1999, is a market leader in the gambling and financial trading industry. The world’s largest online gambling software provider has been instrumental in cutting-edge solutions and has significantly increased the value of the industry’s leading operators.

This provider’s leading online gaming applications include online casinos, poker, bingo, sports betting, live gaming, casual and fixed odds games.

Sagi founded the company more than 15 years ago and sold his remaining shares in the group in 2018.

Aristocrat – Australian gaming company that operates in more than 90 countries

Aristocrat slots is an Australian gaming provider of land and online gaming solutions, operating in more than 90 countries. This provider launches various products and services, including electronic gaming machines and casino management systems.

Recently, this publisher has moved to enter the online real money game segment faster and more strongly by acquiring the entire Playtech plc.

Aristocrat said it believes this acquisition will accelerate its growth strategy and deliver strategic benefits, including offering physical scale in the online RMG (real-money gaming) segment across multiple regions – especially in North America.

Playtech shares surge after Aristocrat agrees to take over

After announcing the company would be taken over by Australian betting business Lord for 680p in cash, shares of online gambling software provider Playtech unexpectedly surged, 55% to 667p.

The price represents a 58.4% premium on Friday’s closing price and 60% of Playtech’s volume-weighted average price over the past three months. The deal values Playtech at £2.1 billion on a fully-diluted basis and up to £2.7 billion, including net debt.

It is known that the entire acquisition of Playtech plc, founded by billionaire Sagi, will help Aristocrat promote and scale up its operations in the online sports betting market in the US.

The Isle of Man-based Playtech has recently expanded in North America as states including New Jersey have relaxed rules on online sports betting and gambling.

This agreement is also expected to help Aristocrat’s casino business grow even more than before.

Aristocrat expressed that it hopes to benefit from Playtech’s presence in the North American and European markets.

“The business will be particularly located to solve maintainable stockholder value by snatching chances in the fast-growing worldwide online section as they last to open up in North America,” shared Trevor Croker, Aristocrat’s chief executive.

“The proposed acquisition continues Aristocrat’s approach of investing in medium to long-term growth, and we are extremely excited by the opportunities that this will bring for our shareholders, people, customers, and players,” he continued.

On the Playtech side, Mor Weizer, chief of Playtech, also expressed his view that this agreement “has the potential to enhance our distribution, our capacity to build new and deeper relationships with partners, and bolsters our technological capabilities”.

Aristocrat also said that it would review Playtech’s operations in unregulated markets.

It is known that Playtech is one of several online gambling companies that can overcome barriers in several markets, including Asia. They can also provide remote gambling services to unlicensed operators through agents. However, the authorities in China have recently put regulations restricting online casinos’ operations and access to these betting sites.

For the above information, analysts at Morgan Stanley had expected that any pullback from these restricted markets would have only “limited impact”.

Brian Mattingley, chair of Playtech, has made the point that “Realistically it’s down to Aristocrat. They stated they will review unregulated markets, and that is Aristocrat’s decision.”

The deal between these two companies will be complete in the second quarter of 2022, subject to shareholder approval.

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