Playtech secures regulatory clearance to complete Finalto sale

Playtech has announced that it has received all required regulatory approvals to complete the sale of its Finalto financial trading division to Gopher Investments.

Group of diverse people having a business meeting

The all-cash sale was approved by shareholders during a general meeting in December last year and, in line with the sale and purchase agreement, is expected to complete on 30 June.

Gopher, a minority shareholder in Playtech, tabled its $250m (£208m/€239m) bid for Finalto in June last year. The Playtech board agreed to sell the business to Gopher in September of 2021.

“The completion of the transaction is a significant step in Playtech’s stated strategy to simplify the group and to focus on its technology led offering as a pureplay business in the high growth B2B and B2C gambling markets,” Playtech said.

Playtech initially put Finalto up for sale in March 2021 in order to focus on its core gambling business, but had been considering plans to divest it since 2019 due to poor performance.
In May last year, its board agreed to divest Finalto to a consortium led by Israeli private equity fund the Barinboim Group, in a deal worth up to $210m. However, in July of the same year, Gopher emerged with its counteroffer.
As a result, Playtech delayed its general meeting – where shareholders would vote on the Barinboim bid – at Gopher’s request, allowing the board to seek further information about the proposal.
The board asked the Hong Kong-based business a number of questions, largely related to its ownership, possible links to China and whether these factors could hinder regulatory approval of an acquisition.
While Gopher answered initial questions, Playtech said it required further clarity on some of its responses. After it did not receive additional responses, Playtech’s board announced that it would continue to support the Barinboim consortium bid and hold its general meeting where shareholders could vote on the deal.
However, despite the board’s approval, the majority of voting interest rejected the Barinboim offer. In total, shareholders representing 75.3 million shares voted for the deal. However, shareholders with 164.3 million shares – or 68.3% of total votes cast – voted against.
This meant that the agreement between the Barinboim consortium and Playtech was no longer valid, allowing the supplier to negotiate fully with Gopher. The broken agreement mean Playtech must pay the consortium $8.8m.
Despite skepticism from Barinboim, the supplier’s board agreed a deal to acquire Finalto.

The Gopher bid was initially linked with an offer from Aristocrat’s to acquire the Playtech business, as upon shareholders approving the Gopher offer, Playtech said that the bid “meets a key condition” of Aristocrat’s offer.

However, Aristocrat’s proposed acquisition failed to secure enough shareholder backing to proceed. In total, 174 shareholders representing 56.13% of Playtech – or 140.5 million shares – voted in favour of the bid at a court meeting, while 54.68% did so at a general meeting.

Both of these totals were well below the 75% threshold required for the merger to be approved. Shareholders representing 43.87% of the business voted against the deal. At least 75% of voting shares needed to approve the scheme if the 680 pence per share bid, which equates to a purchase price of around £2.70bn, were to proceed.

JKO Play had also been in talks over a possible offer to acquire Playtech, but withdrew from the process.Gopher also registered an interest in making a bid in November of last year but dropped out of the running a few weeks later.

TTB Partners made an approach over a possible takeover in February, with Playtech having agreed to release TTB from certain restrictions to allow it to form and potentially make an offer.

Playtech said it had agreed to the request but warned that there was no guarantee this would lead to an offer. The tech giant also said it would likely be the case that any offer from TTB would be made in cash.

The restrictions placed on TTB – part of the City Code on Takeovers and Mergers – came as a result of its role in advising Gopher over its potential takeover offer for the business.

The restrictions on TTB, which would have blocked it from making an offer itself, were due to remain in place for six months from the withdrawal date, through to 20 May. However, with these lifted, TTB was able to begin to form its own offer.

Playtech CEO Mor Weizer has declared his support for a possible bid, which must be submitted by 17 June.

Author: Raymond Fleming