Playtech (PTEC) shares surge over 57%. Should you buy it now?

Highlights

  • Playtech has received a takeover bid from Aristocrat Leisure for £2.7 billion.
  • Aristocrat will raise A$1.3 billion through the sale of its shares to fund the purchase.
  • The takeover deal is expected to lead to the formation of one of the largest business-to-business platform providers in the global gaming industry.

Playtech Plc (LON: PTEC), a leading developer and supplier of online gaming and sports betting software, has surged over 57%  on the London Stock Exchange (LSE) after getting a takeover bid from  Aristocrat Leisure.

Aristocrat’s £2.7 billion deal for Playtech

Aristocrat Leisure Ltd. (ASX: ALL), an Australia-based slot machine manufacturer, entered into an agreement to take over the UK-based gambling software developer Playtech for £2.7 billion ($3.7 billion). The deal values LSE-listed Playtech at 680 pence ($9.35) per share and is slated for completion in Q2 2022.

Aristocrat will raise A$1.3 billion through the sale of shares to fund the deal. Playtech’s largest shareholder with a 21% stake in the company also backed the offer. The takeover deal is expected to lead to the formation of one of the largest business-to-business (B2B) platform providers in the global online gambling industry.

Playtech – Aristocrat acquisition details

Integration of Playtech’s business would enable Aristocrat to enhance its distribution network, boost capacity and technological capabilities. In addition, the combined entity will offer a broad portfolio of end-to-end solutions for gamers all across the globe. Post-acquisition, Aristocrat also expects Snaitech, Playtech’s omni-channel gambling operator based in Italy, to open up new European and North American business opportunities for the company.

The high demand for online betting driven by the pandemic has played a pivotal role in triggering consolidation in the industry. UK-based Entain Plc (LON: ENT) was approached for a takeover by the American fantasy sports firm DraftKings (NASDAQ: DKNG) in September this year.

Playtech financial performance review

The company was founded in 1999. It is a constituent of the FTSE 250 Index. Apart from Europe, the company has been focused on the expansion of its business to North America.

Playtech Plc reported revenue of €1,079 million in 2020 compared to €1,441 million in 2019. Its adjusted EBITDA was €310 million compared to €383 million in 2019. The company recorded an adjusted profit before tax of €45.1 million in 2020 compared to €177.8 million in 2019.

Playtech Plc’s (LON: PTEC) share price performance

Playtech’s shares were trading at GBX 678.00, up by 57.97 per cent as of 18 October 2021 at 14:49 PM BST. The shares of the company returned 82.92% to shareholders in the last one year. The market cap of Playtech currently stands at £1,314.88 million.

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