Aristocrat readies for American online gambling gold rush
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Playtech paves the way for Aristocrat to enter the $US70 billion ($94.4 billion) online “real money gaming” (RMG) industry, which includes real money sports betting and gambling at digital casinos.
“I think that’s the nature of this industry where it is only starting to be regulated, it’s starting to mature at the moment. And that’s why we think entering North America with Playtech is so compelling,” Mr Croker said.
“We believe that has a very strong growth trajectory, driven by underlying structural trends with product innovation, customer demand and the opening of regulated jurisdictions.
“We believe the current $US70 billion addressable market has the potential to grow in line with broader consumer, and technology trends, which has only accelerated through COVID. The North American market is forecast to see the strongest growth over the medium term,” he said.
Playtech runs the industry’s largest purpose-built live casino facility and is one of the world’s largest online software gambling suppliers, developing platforms and content for the gambling industry and operates in 24 countries. It provides software for 170 online gaming operators in the RMG sector, including sports betting giants such as Entain (owner of Ladbrokes), Flutter and Bet365.
The aquisition would round out Aristocrat’s gambling infrastructure, but the move also represents a switch for Aristocrat from pure infrastructure supplier to gaming and wagering operator via Playtech’s business-to-consumer (B2C) division.
Playtech’s Italian business – Snaitech – runs betting shops, gaming parlours and online operators, giving punters the chance to gamble on slot machines, sports, horse racing and a range of online games.
The London group’s business-to-consumer and business-to-business arms had EBITDA of $396 million in the year ended June 30.
But Mr Croker said on Monday that Aristocrat would review Playtech’s operations in a number of high-risk jurisdictions, and potentially exit them, with the potential for between $78 million and $125 million of EBITDA to be significantly reduced or eliminated entirely. The high risk jurisdictions were not identified.
Aristocrat entered a trading halt on Monday morning ahead of announcing the proposed aquisition to the Australian Securities Exchange. The acquisition ends more than 12 months hunting for a company of Playtech’s size and calibre.
Mr Croker said management scoured the market, assessing a swathe of smaller and cheaper companies before deciding on Playtech because it has the software and global footprint to scale up business to business and customer-facing products.
“This has been going on for over 12 months... it’s been going on for a significant amount of time... we’ve looked at many different alternatives to [Playtech],” Mr Croker said.
“We looked at smaller scale solutions that potentially may have been cheaper that could have been scaled.
“[But] to be honest with you, we were, ideally targeting a platform and integrated system, which Playtech offers. And [we were also looking for] the ability, with very strong technology, to be able to scale and integrate,” Mr Coker said.
Shareholders of London-listed Playtech are being offered 680 pence per share, a 58.4 per cent premium to the company’s closing price on Friday.
Aristocrat has tapped the market for a $1.3 billion equity raise to fund the deal, which will also be funded by a combination of $1.1 billion worth of existing cash and a $2.8 billion new term loan B issue.
The Australian Financial Review’s Street Talk reported UBS and Goldman Sachs are in the market for the capital raise. Brokers’ desks contacted funds on Monday morning offering new Aristocrat shares at $41.85 each as part of a one-for-20.56 pro rata entitlement offer.
The deal was underwritten and priced at an 8.6 per cent discount to the last close. It was structured as a pro rata accelerated renounceable entitlement offer with retail entitlement trading.
