Australian slot manufacturer, Aristocrat Leisure recently announced that it would be acquiring London-listed gaming software supplier Playtech for $3.7 billion. This deal will generate new growth potential areas for the gambling machine specialist, such as real money gaming.
Playtech’s shares responded positively to the news, soaring by 57% to a three-year high. Aristocrat Leisure’s shares are on a trading halt until Oct. 21.
The upswing in online betting, precipitated by the global pandemic has inspired many organisations in the industry to look to consolidation as a growth strategy. The UK-based Entain was recently courted by U.S. fantasy sports company DraftKings. Australia’s Tabcorp Holdings has also fielded numerous recent acquisition bids earlier for its wagering unit.
Playtech revealed that its largest shareholder, which holds a 21% stake in the company, was in favour of the offer. The company further advised that it would push for its stakeholders to vote in favour of the deal as the merging of the two companies would position the manufacturer ideally to flourish within a rapidly digitising sector.
Aristocrat’s Chief Executive Officer, Trevor Croker said,
“The business will be ideally positioned to unlock sustainable shareholder value by seizing opportunities in the fast-growing global online RMG segment as they continue to open up, particularly in North America.”
The Sydney-headquartered company also revealed that the deal would be funded via a $1.3 billion equity raising drive, in combination with new debt, and existing cash reserves. Aristocrat started that it fully anticipates a significant earnings boost within the first year of the conclusion of the deal.
This is not the first interaction that the two companies have had with each other. In September 2014, Playtech acquired Aristocrat Lotteries, positioning the company as a leading supplier of video lottery terminals in Europe and Latin America.
