Asian Investors Equity Block Hampers Another iGaming Deal
Asian investors in the gambling sector have been consolidating their holding of British company Playtech, and have managed to effectively block the takeover by a third-party investor. The British-based company had to get approval from 75% of its shareholders for the deal to be confirmed, and by the time voting had ended the total volume of support was 55%, well short of the required threshold.
The equity positions in key British gambling companies have become the target for a host of Asia based investing groups. These players are aggressively pursuing controlling stakes as they seek to disrupt the highly lucrative market. ©sergeitokamakov/Pixabay
The London-based Playtech saw its shares jump by 5% on the London Stock Exchange following an announcement that the firm would be pursuing other options as they look again at the equities market for potential buyers. News that Playtech would be again potentially looking for another buyer was enough to encourage financial institutions to buy and hold their stock, all whilst the company refused to give any context to the vague statements they had just made.
British media have been hot on the heels of this story since the firm first began investigating the possibility of an external takeover. According to Sky News, the British gambling software giant has courted interest from a Hong Kong-based investment firm, namely, TT Bond Partners. Both Playtech and TT Bond have declined to provide further comment on these reports, but that may be due to ongoing regulatory checks surrounding the bidding process from TT Bond who may be locked from making a second bid for the company.
With the takeover attempt now well-and-truly dead, Aristocrat will be feeling incredibly let down by their Playtech counterparts. The deal had been brewing for several months, and up until the shareholder meeting a couple of days ago, all the narratives being made public by Playtech led the Aristocrat board to believe that their takeover attempt would be received in a positive manner. So, what next from the tech-giant Playtech in its search for a new partner.
Merger & Acquisition Activity in Online Gaming Soaring
Since the onset of the Covid-19 pandemic there has been an incredible rise in the number of mergers & acquisitions in the online gaming space. The brisk activity spike has been the market reacting to the increased user numbers across the biggest online gaming platforms. With the numbers at brick & mortar establishments dwindling, the investment opportunities for online operators have served as a compelling proposition for all of those looking to establish a higher return alternative in the gaming industry.
British entities seem to be the most sought-after in global markets. Ladbrokes parent company Entain has already pushed away two takeover attempts in the last 12 months from American companies. The hunt for British talent in the gambling sector has been following a similar trend, with executives working for the British gambling corporations routinely being headhunted for lucrative roles across the pond. As the US market enters its genesis phase, the big players recognize the need to stack their boardrooms with experienced gambling operator builders if they want to be well-positioned.
Playtech was approached by multiple investors last year with proposed takeover bids. One such bid came from JKO Play, a consortium led by ex F1 team boss Eddie Jordan. JKO had big restructuring plans for Playtech until Jordan withdrew the bid in January this year, according to the Financial Times. All of this swirling interest had caused analyst firm Peel Hunt to turn bullish on the stock, upgrading it from add to buy, and valuing the company at 700 pence a share.
Hong Kong Investors Hold a Blocking Stake in Playtech
In a strange twist to this story that is important to understanding why Playtech has proven to be such a difficult company to purchase. A concert of Asian investors appears to be working together and using their large, consolidated position to influence the future decisions taken by the company. Holding a stake with such a large percentage of equity has enabled the group to block key decisions before they materialize.
These hostile business practices have been raising eyebrows everywhere around the UK regulatory halls, as many wonders if this is in fact a direct violation of the UK company takeover act. In any case, the situation at Playtech shows how vulnerable British companies remain to foreign investors, often based in the far-east using various sophisticated methods to mask their true identities.
