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134M EUR of success fees for PTEC and SNAI management equals 134M/305M = 44 cents (0.37 GBP) per share from shareholder pockets. It is 0.37/7.28= 5% of current SP.

At the same time Deutche raises SP target 8.73 -> 9.08

https://www.morningstar.co.uk/uk/news/AN_1729760344128201200/london-broker-ratings-ubs-raises-lloyds-and-hochschild-price-targets.aspx

The initial source of the information is a very juicy piece

https://rapercapital.com/2024/10/03/an-open-letter-to-the-chair-of-the-remuneration-committee-of-playtech-plc/

Https://next.io/news/investment/playtech-investors-slam-100m-bonus-scheme/

I kind of agree with these guys. Sales of 9x EBITDA is a normal result, not outstanding. Corporate governance is below the standards

I kind of agree with the article. The sale of Snai for 9x EBITDA is a normal result, not outstanding. Corporate governance in PTEC is below the standards.

Valuation of PTEC has become much easier after selling Snai and restructuring the Caliplay relationship.

The sale of Snai is worth 1.8B EUR for stakeholders + 0.12B proceeding to PTEC = 1.92B EUR which translates to 1.6B GBP (https://www.londonstockexchange.com/news-article/PTEC/proposed-sale-of-snaitech/16668299 appendix 2, note 5)

B2B of PTEC's mid-term EBITDA is 200-250M EUR according to PTEC management (we get an update on Monday). The industry average EV/EBITDA is 10.

What could be PTEC EV/EBITDA multiplier?

Two important changes will happen soon. First, the debt is paid back and second, we have clarity around Caliplay.

I admit that the corporate governance of PTEC will remain an issue for me.

I do not see reasons why the EV/EBITDA of PTEC should be below the industry average anymore. Thus, I am bullish that it should be 10+.

Taking the multiplier 10, it translates to 2-2.5B EUR valuation of PTEC B2B or 1.67-2.09B GBP

Thus, my valuation of the current PTEC is 3.27B (1.6+1.67) to 3.69B (1.6+2.09) GBP. Dividing it by outstanding shares of 304.69M gives an SP range of 10.73GBP to 12.11GBP

Plenty of upside still from the current SP 7.5GBP.

Can we applaud management if the stock price is 5-6 times EBITDA while the actual sale of assets such as Snai is at 9x EBITDA?

I think the stock price could easily be 9x EBITDA or even more due to the outlook in the Americas. The reason it is not is poor corporate governance. Enhancing corporate governance is in the hands of management, but unfortunately, they have not done well in this area. I will list a few things that disturb me:

* There is no clear explanation of how the option for 49% of Caliplay ended up as 30.8% in actual equity. The 49% option was estimated to be worth 736M EUR in the 2023 annual report. Adequate compensation for that would have been 282M EUR. Caliplay pays Playtech 140M USD for something that is vaguely explained. Is this the compensation for the reduced equity share? Is this a successful negotiation? Was this adequate pricing of the option?

* Misalignment of management and shareholder interests. Management's goal should be shareholder value. The best alignment is to give them share options. One-off cash bonuses are okay, but 100M cash bonuses are not.

* Low transparency for small investors. Some things seem to happen between management and large shareholders that are not visible to small investors.

* There is no data about when financials are published. There was no sign of the 16th September update of half-year results. Even the 30th September presentation of first-half results was published on the 16th. It is hard to plan if I don't live in the UK and want to attend physically.

* Unpredictable dividend policy. There was this one-off dividend when Teddy Sagi sold his shares, and now an even larger one-off dividend is planned. This is nice, but a steady, predictable dividend would be even better."

Taking an optimistic view, based on recent takeovers of B2B and B2C providers, Playtech takeover value would be around 6B EUR. The current valuation is 2.25B EUR. So IMHO we do have room for growth.

Some facts:

Neogames 2022 Financials:

Revenue 166M USD

EBITDA 11M USD

Net income -18M USD

Acquired for 1.2B USD by Aristocrats

Playtech 2022 Financials:

Revenue 1.6B EUR

EBITDA 405M EUR

Net income 160M EUR

If we leave out B2C (Snaitech), then PTEC B2B figures for 2022 are:

Revenue: 632M EUR

EBITDA: 160M EUR

Based on revenue, I would say the comparable B2B takeover value of PTEC is ca 4x value of Neogames, which is around 4.4B EUR

Then we can add the value of Snaitech around 2B EUR (comparable takeover of Sisal was 1.9B EUR).

Adding B2B and B2C value gives us PTEC valuation of ca 6B EUR.

From today´s news, we have a new non-exec directory from Hongkong. In the last private buyout attempt, CEO Weizer cooperated with TT Bond group from Hongkong. The share price is rising strongly. Coincidence? No, I think Asians can calculate too.

We are continuing to evaluate business combination opportunities, including alternative opportunities with Caliente, Caliplay and Playtech...

https://www.casino.org/news/tekkorp-digital-needs-more-time-to-find-business-combination/

Here we go again...
1. We have a CEO who is more loyal to one shareholder (TTB) than to the company, but does not resign.
2. We have a shareholder that exclusively knows 100% about the company plans, insider information, etc. but is not restricted in trading in any way.

GLA

Based on Financial Times :

Mr. Hall and Mr. Weizer "backed by TTB and two large financial institutions in the UK and US, said they plan to submit a higher offer than Aristocrat’s to the Playtech board “shortly”. "...

Mr. Hall claims he does not have relations with the HK crew. If this turns out to be true, the management buyout price must provide some incentive to all shareholders including the fresh HK ones and "UK-based tier one institutions, certain former employees of the company including certain people that are still involved with the company who believed that the Aristocrat offer was too low." This section might imply to Mr. Hall , Mr. Kivisik and others.

The Hong Kong crew bought their share in the range of 7.20-7.75. Mostly around 7.30-7.50.. and they might expect premium.. So, make your bets, gentlemen!

The open version of the FT story can be found here https://trendfool.com/business/playtech-chiefs-accuse-aristocrat-of-misinformation-campaign-in-bid-battle/

What a mess. Conflict of interest is inevitable for Mr Weizer. Going from the seller´s side to the buyer's side in the middle of the game. Not ethical, not professional, and leaving no firepower for bargaining for PTEC. He must be well motivated to act like that :)

IMHO this also means that the deal is actually done. Mor just cannot continue managing the company as usual anymore after this betrayal.

Leaving emotions aside I tend to believe the offer will be in the range of 7.4-7.8 to somewhat justify all this in the eyes of the shareholders.

Stefano, yes I believe this is the consensus.

Voting is over and now things should start to move. I am pretty sure the Asians do not want to sit a long time at their nearly 1B USD PTEC position.

One remark.
Asians cannot buy the PTEC unregulated biz as AFAIK PTEC is just a software provider there (unlike in Latin-America). Thus, if Asians want to keep their grey/black market with PTEC products, they must have a buyer that tolerates unregulated biz. Switching to another provider may be complicated for several reasons (eg. Tom Hall )

It is not so simple. Asians have taken 28% of free float off the market and will not sell it at current prices. Not sure who is gonna sell here to reach -10%, maybe only some M&A investment funds. IMHO failing of Aristocrat offer is already in the prices.

6.8 GBP price tag will not see my signature. It is far less than sum of the parts at current prices (including the existing biz, stake at Caliente and SNAI, US biz&opportunity) and leaving out any synergies that different branches of PTEC businesses have (distribution of games, marketing know-how, etc.).

I argue that the situation has also changed compared to the time when Aristocrat made its offer. A few months ago it was not known that Caliente is worth 0.67B GBP more than on the balance sheet (read my post below). It was also not known that the acquisition of Sisal reveals a price for Italian operators that corresponds to 1.5+B GBP for SNAI (roughly 0.5B more than expected by the market).

So we are talking about 1B+ GBP extra value in PTEC which corresponds to 3+ GBP per share.
I believe it is fair to assume Aristocrat did not have insider information about Caliente and SNAI when making the offer.

Now the question is how much I would be ready to give up from the extra 3+ GBP per share to Aristocrat for their immediate cash offer.

I think I would accept the all-cash offer starting from 8.5 GBP per share, which leaves more than 1/3 of the upside to the acquirer. Otherwise, I am ready to wait for divesture, a new offer or continue with BAU.

From RNS: "Playtech and JKO Play Limited ("JKO") have requested the Panel set a revised deadline /from 12th of Jan to 2nd of Feb/, aligned to this new date for the Shareholder Meetings, by which JKO must clarify its intentions in relation to Playtech."

Let´s review the facts:
* Aristocrats have made an offer of 6.8 GBP per share, which translates to 2.7B GBP market cap.
* Asian guys have purchased 10-20% stake. Their intentions are not clear.
* Share price is constantly in range of 7.25-7.4 GBP, considerably higher than Aristocrat offer. So someone is constantly buying.
* Divesting value (if all goes well) of Playtech is approx. 2bn EUR for Snai, 1bn EUR for Caliente, + US business (more potential value and less current value) + the rest of business. (more current value and less potential value). I would say that in total it is definitely worth twice as much as Aristocrats has offered.

Why does JKO want extra month?
Buy more shares? Find financing for the deal? Wait for progress with sales of Caliente? Or really just progress with the due diligence (which I hardly believe)?

Well, Mr. Market does not seem to agree with my arguments. A few things can go wrong with what I wrote:

1. Caliente 2.5B deal may fail. If it would be finalized, we would have an RNS from PTEC mgmt.
2. Current PTEC bidders might have had insider information about the deal before yesterday and it is already included it in the price.
3. The Caliente deal is not finalized before the PTEC deal gets done.

Fair value of Caliente 49% option is 338.5M USD in the 2021 half-year report
https://playtech-ir.production.investis.com/~/media/Files/P/Playtech-IR/results-reports-webcasts/2021/2021-half-year-results-report.pdf

The actual value of the Caliente option is 2.5Bx49%=1.225B USD
Which is an extra gain of 1225-338.5= 886.5M USD, equal to 670M GBP
Playtech has roughly 300M shares.
Thus, I would expect 670/300= 2.23 GBP premium per share compared to the current offering.

So, correct me if I am wrong, but for Aristocrats, the new expected offer price could (should?) be 6.8+2.23= 9.03 GBP
For Eddie Jordan it is 7.5+2.23=9.73 GBP

For me the whole story raises a big question about the accuracy of evaluation of other options on the Playtech balance. sheet.

It is rumored that Gopher will make a 3B GBP offer for PTEC. It means that Gopher adds 300M to the Aristocrat 2.1B equity offer. In this case the new target price is 2.4/2.1 x 680 = 777