Playtech (LON: PTEC) shares: Should you buy ahead of acquisition?

Highlights

  • FTSE 250 listed gambling software developer Playtech Plc has rescheduled its shareholders’ meeting to approve the cash acquisition of the company.
  • Playtech Plc received a 680p per ordinary share offer from the slot machine maker Aristocrat Leisure Limited in October 2021, which valued the company at £2.1 billion.

FTSE 250 listed gambling software developer, Playtech Plc (LON: PTEC), has pushed back its scheduled meeting of shareholders to approve cash acquisition of the company by Australia-based Aristocrat Leisure Limited.

The shareholder meeting was set to take place on 12 January 2022. However, the company’s board has rescheduled the meeting to 2 February 2022 to allow more time for a possible counter bid by JKO Play Limited, a consortium led by Eddie Jordan and Keith O’Loughlin. JKO Play Limited has time until 26 January 2022 to make a firm acquisition offer.

Playtech Plc received a 680p per ordinary share offer from the slot machine manufacturer Aristocrat Leisure Limited in October 2021, which valued the company at £2.1 billion. Since then, investors speculated bidding war that resulted in a significant rise in share price. The share price has been up by over 51% in the last three months. However, Aristocrat’s acquisition bid remains the only firm offer for the Playtech shareholders to date.

As per market experts, Playtech Plc didn’t receive a potential counterbid as the company holds a 49% stake in Mexico-based Caliente Interactive, which is in advance talks to list its shares on the Nasdaq. Many potential bidders may face difficulty figuring out an exact offer price that reflects this potential upside. Also, acquisition bids may likely come once the Caliente Interactive shares are listed on the exchange.

Playtech’s Business Performance

The company provides gambling software, technology platform, and content service to its clients. It owns intellectual property rights of software and offers its products across verticals like live casinos, sports betting etc.

The boom in online gaming and live casinos after the pandemic has benefitted the company’s business. For the six months ended 30 June 2021, the company reported a revenue of €457.4 million, with adjusted EBITDA of €124.1 million driven by solid performance in the B2B and B2C segment. The company’s management has a positive view and expects business growth in the second half of 2021 amid an improving macroeconomic outlook.

Share price performance

Playtech Plc stock price movement

(Image Source: Refinitiv)

The company’s share price currently trades at GBX 719.50, down by 1.64% after deferring the shareholders meeting. Nevertheless, the stock has shown good performance generating a return of 75.19% to its shareholders in the last one year. The current market cap of the company stands at £2,244 million.

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