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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.
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.