Gopher Investments adds “certainty” to Finalto offer with break clause

| By Daniel O'Boyle
Playtech shareholder Gopher Investments has improved its bid for Finalto, the supplier’s financial trading division, with a break fee designed to “add greater certainty” to the offer.
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Playtech’s board had agreed in May to sell the division to a consortium led by Barinboim Group and backed by Leumi Partners and Menora Mivtachim Insurance. The deal would be worth up to $210m, with an initial up-front payment of $170m, a deferred but guaranteed $15m payment and the remaining $25m paid based on performance.

However, last week, Playtech minority shareholder Gopher Investments produced its own $250m all-cash offer. It then encouraged Playtech to delay its general meeting – in which shareholders would vote on the Barinboim bid – in order to agree terms on the new offer.

While advisory body Institutional Shareholder Services backed the Gopher bid, Barinboim warned that the deal would create uncertainty and destabilisation for Playtech, as it did not have the certainty of the break clause agreed in the consortium offer.

In response, Gopher has now improved its bid, adding a $10m break fee. Gopher must pay the fee to Playtech if it does not enter into an official sale and purchase agreement on terms “materially equivalent” to the consortium bid within three weeks of the start of the due diligence process. The fee must also be paid by Gopher if the deal fails to receive regulatory approval.

“The break fee is also subject to Playtech engaging properly with Gopher and acting reasonably and in good faith, and would not be payable if Playtech subsequently enters into a transaction for Finalto with a third party,” Gopher added.

Gopher also pointed out that the break fee is 13.6% higher than the $8.8m break fee agreed with Barinboim. If Playtech was to accept the Gopher deal, it would be forced to pay this $8.8m fee to Barinboim for breaking its agreement.

“Gopher is the second largest shareholder in Playtech, with approximately USD 100 million of capital invested, and is therefore fully aligned with all other shareholders in supporting the Board to deliver maximum value for all shareholders,” Gopher added.

The investment group also again urged the supplier’s board to postpone its 15 July general meeting, and said that if it does go ahead, shareholders should vote against the consortium’s bid.

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