Mergers and acquisitions in the iGaming industry are not a new phenomena. In 2020 Flutter Entertainment bought out The Stars Group to create a new gaming giant. Since then many other companies have followed suit. Often the acquisition is in service of purchasing new technologies or integrating new markets. Most notably William Hill being divided up between Caesars and 888 Holdings.
In most recent news, Australian slot machine manufacturer Aristocrat Leisure Ltd. has agreed to purchase British gambling developer Playtech Plc for $3.7 billion. The deal will once again cause tectonic shifts in the iGaming landscape. The offer filed on October 15 cited the last closing price, plus a premium, for a total of $9.35 per Playtech share. That constituted a 58% premium on the original share price traded. Following the announcement, Playtech saw its shares immediately soar by another 57%. Markets were immediately buoyant on the news of another consolidation in the industry.
Aristocrat Stakes Its Claim on a Big iGaming Market
Aristocrat will seek to fund this deal through cash and share sales. The company will issue a $1.1 billion share sale to raise additional capital to cover the agreed sum. The deal is a big move for the companies. There are still quite a few regulatory hoops for both firms to jump through. Anti-competition regulators in the UK, US, and Australia are all interested in this deal.
Aristocrat’s goal is to secure a bigger slice of the iGaming market. In the company’s estimates, iGaming was worth $70 billion globally in 2020 alone. With the purchase of Playtech, Aristocrat looks to significantly increase their market. The new larger firm will be the biggest B2B platform providers in the global gaming industry. This according to data by Aristocrat collected as due diligence about Playtech.
Aristocrat CEO Trevor Croker notes the newly enlarged company would gain significant advantage. They would be able to offer the most comprehensive end-to-end solutions for B2B gaming customers around the world. The benefit to the players will be a more seamless experience. For the operators, providing that experience will become easier.
Aristocrat’s interest in Playtech focuses on Snaitech. The Italian subsidiary had been acquired by Playtech in 2018. Snaitech’s access to the Italian gambling market is a huge selling point. They already offer an omnichannel gambling experience in that market. The acquisition would allow Aristocrat to access a well-developed market. Additionally, the acquisition places Aristocrat in a good position to pivot towards Europe and the United States.
Ripple Effects Across iGaming
Mergers of this magnitude hardly happen in a vacuum. Aristocrat is making a play for adding to its capacities. The company seeks to mitigate its dependence on the brick-and-mortar segment. Mor Weizer, Playtech CEO, is optimistic the acquisition will mean big things for his firm as well. Playtech will gain distribution channels through Aristocrat’s existing markets and vice versa.
The Playtech casino software has established itself as the gold standard in the iGaming industry. The acquisition will only increase the available development resources. This process promises to take the business to new heights.
A Few Final Details Still Remaining
There are still a few question marks that must be resolved. The pending Merger is definitely a welcome sign in the industry, there are things to take notice of. Playtech is currently spinning off its financial trading division, Finalto. This is still the subject of negotiations and regulation.
For Playtech to join the Aristocrat family, Finalto’s final fate needs to be determined. Russ Mould, from AJ Bell, believes that the financial trading services are another “delectable morsel.” Another asset that makes Playtech’s offering more tantalizing for Aristocrat.
Mould admitted that Finalto was a little untidy. That untidiness almost caused the deal to die before it began. Aristocrat’s decision to enter the highly-lucrative iGaming segment was not going to be hindered. Investing some time and effort to bring Finalto up to speed seems to have been the plan all along.
Other Industry Mergers
Meanwhile, consolidation attempts continue. GVC Holdings, now known as Entain, has fended off two takeover bids. One coming from a partner, MGM Resorts International. The bid by MGM Resorts’ was a surprise to most. Though it was eventually turned down it is not the end of the saga. DraftKings has stated its interest in Entain. In the end DraftKings proved to be uninterested when up against a deadline. Other companies showed hesitance but Aristocrat has decided to break into iGaming with the help of Playtech.