Playtech in talks with shareholder Gopher on potential takeover; Aristocrat's bid faces competition

Weeks after agreeing to a buyout from Aristocrat Leisure, Playtech is now in talks with Hong Kong-based Gopher Investments over a possible takeover offer. The British online gambling software firm’s shares have seen a 3% increase on Monday.

Gopher is Playtech’s second-biggest shareholder, counting with a nearly 5% stake in the firm through an affiliate TT Bond Partners. A preliminary approach was made on October 21, seeking access to some due diligence information to weigh a possible offer, Playtech confirmed in a statement Monday.

Conversations with Gopher were described as in an early stage, and terms of the potential bid have not been disclosed yet. However, it is believed the takeover offer is worth about £3 billion, according to Sky News, which first reported on the subject. 

A series of undertakings from Playtech shareholders to accept Aristocrat’s offer, worth about £2.1 billion, would lapse should a rival suitor offer a price at least 10% higher than that bid. In consequence, Gopher’s offer would have to be at least 748p-a-share to secure board recommendation.

Gopher, a prominent Playtech shareholder, is allegedly working with bankers at Rothschild in the offer, which would trump Aristocrat’s bid, first announced last month. Sources familiar with the matter have told the previously cited new source that Gopher’s deliberations were not guaranteed to lead to a formal offer, but that the company was looking “seriously” at doing so.

In September, Gopher managed a deal to buy Playtech’s financial trading unit, Finalto, following a months-long battle with the British company and an Israeli consortium led by Barinboim Group. The deal, for an enterprise value of $250 million in cash, is expected to be completed in the first half of 2022.

Regulators must now decide on a deadline by which the Hong Kong-based investment firm must either present a firm intention to bid for all of Playtech or walk away. It still remains unclear how Gopher would structure an offer for the entirety of Playtech, given the Finalto transaction has yet to reach its conclusion.

Aristocrat has acknowledged Gopher’s possible offer for Playtech in a new statement, defending its bid. “Aristocrat's long-term engagement with regulators across key gaming jurisdictions, together with strong financial fundamentals, deep customer relationships and established presence in global gaming markets, positions Aristocrat to complete the transaction as planned in the second quarter of calendar year 2022,” the Australian company said.

Moreover, the gambling machine manufacturer said the completion of its offer would provide “certain value to Playtech shareholders,” while the combined group would also provide “greater opportunities” to Playtech’s employees. Aristocrat says it will “continue to work” to progress the recommended acquisition and urges shareholders to vote in favor of its bid.