Aristocrat (ASX:ALL) share price halted for $5bn Playtech acquisition

gaming asx share price rise represented by slot machine paying jackpot

The Aristocrat Leisure Limited (ASX: ALL) share price won’t be going anywhere on Monday.

This morning the gaming technology company requested a trading halt.

Why is the Aristocrat Leisure share price paused?

This morning Aristocrat requested a trading halt so that it could undertake an equity raising to fund a major acquisition.

According to the release, the company has made a cash offer to acquire London-listed leading global online gambling software and content supplier, Playtech, for $5 billion.

This represents a valuation multiple of 11.4x Playtech’s adjusted EBITDA for the twelve months ended 30 June 2021.

Management believes the acquisition will accelerate Aristocrat’s growth strategy over the medium term and deliver sustainable shareholder value. It is expected to be mid to high single digit earnings per share accretive during the first full year of ownership.

The good news for the company is that the Playtech Board is unanimously recommending that its shareholders vote in favour of the deal. Playtech directors who own Playtech shares have irrevocably undertaken to vote in favour of the takeover.

In addition, Aristocrat has received letters of intent or irrevocable undertakings from a number of major Playtech shareholders, including Playtech’s largest shareholder. Combined, a total of approximately 63.4 million shares will be voting in favour of the deal, representing approximately 20.7% of Playtech’s outstanding shares.

What is Playtech?

Playtech comprises two key business segments: Business-to-Business gambling (B2B) and Business-to-Consumer gambling (B2C).

Playtech’s B2B gambling operations include the design, development, and distribution of software and services to the online and land-based gambling industry. It covers all key online real-money gaming (online RMG) segments, including casino, live casino, poker, bingo and sports betting, monetising via a revenue share model.

Playtech’s B2C gambling operations predominantly consists of Snaitech (Italy), a vertically integrated retail and online business leveraging Playtech’s proprietary technology and capabilities. As a leading Italy-based multi-channel gaming operator, it is free of any meaningful channel conflict with Aristocrat’s existing operations. Other B2C brands include HPYBET and SunBingo. HPYBET is Playtech’s retail sports betting B2C business, operating betting shops in Austria and Germany.

Equity raising

The release explains that Aristocrat expects to fund the acquisition with $1.1 billion of existing cash, a $2.8 billion Term Loan B issuance, and $1.3 billion equity raising. The latter will be via an underwritten pro rata accelerated renounceable entitlement offer with rights trading. This is to provide the fairest possible structure for Aristocrat shareholders.

These funds will be raised at $41.85 per new share, which represents an 8.6% discount to the Aristocrat Leisure share price at Friday’s close.

Trading update

Also potentially giving the Aristocrat Leisure share price a boost upon its return is its trading update.

The release notes that Aristocrat expects its NPATA to come in at $864 million in FY 2021 . This will be an 81.1% increase year on year. This strong growth reflects positive performances across all its operations during the 12 months.

The Aristocrat Leisure share price is up 46% in 2021.

The post Aristocrat (ASX:ALL) share price halted for $5bn Playtech acquisition appeared first on The Motley Fool Australia.

Should you invest $1,000 in Aristocrat Leisure right now?

Before you consider Aristocrat Leisure, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Aristocrat Leisure wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2YZBhUQ

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s