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(Alliance News) - The takeover slot machine showed three lemons for Playtech PLC on Wednesday, as shareholders rejected the acquisition of the gambling software firm by Australia's Aristocrat Leisure Ltd.
It was the third 'no' for Playtech in recent months, after both Gopher Investments and JKO Play Ltd decided against making a bid.
Gopher is still set to buy Finalto, Playtech's financial trading division, and a full break-up now seems the most likely outcome for the FTSE 250 company. Earlier Wednesday, in announcing that its shareholders were likely to vote against the Aristocrat deal, Playtech said it had received buying interest for its business-to-business and business-to-consumer operations.
Gopher is buying Finalto for an enterprise value of USD250 million. Aristocrat had agreed to pay GBP2.1 billion for the rest of Playtech, offering 680 pence per share. The deal was worth GBP2.7 billion including assumed debt.
Playtech shares were up 0.5% at 580.00 pence late Wednesday afternoon for a market capitalisation of just under GBP1.8 billion.
Aristocrat shares had closed up 0.9% at AUD41.29 in Sydney on Wednesday, giving a AUD27.65 billion, about GBP14.52 billion, market capitalisation.
On Wednesday, total votes in favour of the resolutions to accept the Aristocrat offer, to which the Playtech board had agreed, were 56.13% at the court meeting and 54.68% at the general meeting, which were below the minimum threshold of 75% in favour.
This means the acquisition has been terminated and the scheme put in place to make it happen has lapsed.
Earlier Wednesday, Playtech had said shareholders were not likely to back the takeover by Sydney-listed Aristocrat, as proxy votes received to that point had not reached the minimum 75% approval threshold.
This followed a statement issued by Playtech a week ago reaffirming its support for the Aristocrat takeover, in the face of a media report that a group of Asia-based shareholders planned to block the deal.
Aristocrat responded on Wednesday morning to the news that its deal was unlikely to pass, saying it had "taken every possible step to engage with this group of shareholders" who were blocking the acquisition. It noted the majority of the shareholders in question had registered after the announcement of the prospective deal.
Prior to the vote, Aristocrat Chief Executive Officer Trevor Croker said: "We are disappointed that our recommended offer to acquire Playtech is expected to lapse. Notwithstanding extensive due diligence on Aristocrat's part, developments since the announcement of our offer have been highly unusual and largely beyond Aristocrat's control.
"In particular, the emergence of a certain group of shareholders who built a blocking stake while refusing to engage with either ourselves or Playtech materially impacted the prospects for the success of our offer, which had been recommended by the board of Playtech."
Playtech said that in light of the expected shareholder vote, it is "evaluating attractive M&A proposals it has received from third parties in respect of [its] B2B and B2C businesses.".
"In the event that the Aristocrat offer does not proceed, the board is determined to pursue options to maximise value for all shareholders and accelerate validation of that value," said Playtech Chair Brian Mattingley.
In January, JKO Play confirmed it did not intend to make Playtech an offer, leaving Aristocrat the sole potential buyer.
Meanwhile, Playtech also said early Wednesday that trading since November in its business-to-consumer and business-to-business businesses has been strong. It expects to complete the sale of Finalto to Gopher Investments in the second quarter of the year.
Analysts at Peel Hunt were unperturbed by the day's events. The broker said that in light of what happened, the positive trading update, and recent share price weakness, it was upgrading Playtech to 'buy' from 'add', raising its price target to 700p from 680p.
By Greg Roxburgh, gregroxburgh@alliancenews.com; and Tom Waite; thomaslwaite@alliancenews.com
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