Gimme Mor: Playtech looks likely to remain listed

| By Scott Longley
Investors found a lot to like in Playtech’s 2021 annual results, except for the fact that it is likely to be heading off into private hands once its takeover saga is resolved. Or is it? 
Gimme Mor: Playtech looks likely to remain listed

Last year was a good year for Playtech, in the end. According to the final results published in late March, revenues rose 12% to €1.2bn, while adjusted EBITDA was up 25% to €317.1m.

The results were decent across both the B2B and B2C operations. In the latter, the Italian retail and online betting and gaming business Snaitech bounced back from the pandemic. Online was the standout, up 45% to €229.9m, helping to offset the forced retail closures during the early part of 2021.

In the B2B business, meanwhile, revenues rose 11% to €554.3m helped by a booming Americas segment where revenues grew 64% to €101.3m. This was driven by the continuing success of the Caliente strategic partnership (more of which later).

Looking further down the page

But of course, it is the corporate activity surrounding Playtech which has stolen all the headlines in the past year.

CEO Mor Weizer is now a part of the potential bid consortium being put together by TTB Partners. The Hong Kong-based investment firm which has also roped in former Playtech CEO Tom Hall, meaning the earnings call with analysts necessarily skirted round the central issue of Playtech’s future.

The bid will (hopefully) bring to an end one of the most complicated and long-winded takeover tackles to ever afflict the online gaming sector.

After an initial approach from Aristocrat, a failed bid from the Eddie Jordan-fronted JKO Partners, the emergence of an Asian-based shareholder grouping ready to block deals it didn’t like and finally the TTB approach, it seems that in the coming weeks the saga will finally reach a conclusion.

And that, we presumed, would be the end of Playtech’s relatively eventful life as a listed company. Formed at the dawn of the online age by Teddy Sagi, the company progressed to London’s Alternative Investment Market (AIM) in 2006 before progressing to the main list of the LSE in 2012.

Weizer himself became the CEO in 2007 but the headlines were often dominated by Sagi and his shareholding, a situation that was finally resolved in late 2018. But if Sagi’s departure from then shareholder register was meant to signal an end to the drama surrounding Playtech’s listed life, then it was a short-lived hope after Aristocrat big emerged early last year.

When Weizer subsequently joined the TTB effort, it appeared to cap the drama with the suggestion that he would be in charge of the business as it set sail as a private entity. These last results, it was presumed, would be the company’s valedictory statement as it not-so-quietly slipped from the public gaze.

But is this the case?

A public affair

Having spoken to a number of company insiders, past and present, as well as other sources with a keen interest in what happens next at Playtech, it appears that a move private – while once the preferred option – is now not thought to be the likely endgame.

Instead, the business is set to remain as a listed entity, albeit with a substantial portion of its shares held by whatever consortium of investors is finally put together by TTB.

It comes down to the percentage that the London Stock Exchange (LSE) will allow for a listed entity to have a majority shareholder.

The thinking is that there is relatively recent precedent for this move. When Guoco bid for Rank back in 2011, its offer to buy shares was accepted by just under 75% of the shareholders, thus as the Financial Times said at the time, managing to stay listed “by the skin of its teeth”.

However, as a corporate lawyer pointed out, the LSE has since changed the rules further.

As of early December last year, the free float/shares in public hands requirement for companies listed on the main market in London was 25%. This was reduced to 10% by the FCA, with effect from that date, along with some other relaxations to encourage companies to choose London for their listing. 

In Playtech’s case, it might be that an offer is made to own substantially all of the company but for a small slug to remain in the open market.

Why is this option attractive? Here the sources suggest that contrary to previous speculation that TTB would want to take the company into the private realm in order to make more of a push in Asia, it is actually the US opportunity that the prospective investors find attractive.

This makes sense. While the rollout of US igaming legislation has somewhat stalled, it won’t be held back forever. There is too much money at stake and providers such as Playtech well know it. It is, after all, why Aristocrat made their own bid

A listing, so runs the current logic, gives Playtech a degree of credibility when it comes to regulators in the US and is a valuable asset. It is not something that should be bargained away in the takeover struggle.

All of which means that far from the last set of annual results being Playtech’s swansong as a listed entity, they actually represent the launchpad for Playtech’s next stage of corporate life.

We haven’t seen the end of Mor Weizer after all, which for those who have been following the company ever since he took the CEO post is a huge relief. He really would have been missed.

Scott Longley has been a journalist since the early noughties covering personal finance, sport and gambling. He has worked for a number of publications including Investment Week, Bloomberg Money, Football First, eGaming Review and Gambling Compliance.

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