Playtech puts its money on a boost from gambling mega-mergers
GAMING software provider Playtech is betting it will receive a boost from the wave of deal-making that is transforming the gambling industry.
Four of Playtech’s customers have unveiled mega-mergers as gambling companies scramble to scale up to offset the growing burden of higher taxes and stricter regulation.
Betfair and Paddy Power announced a tie-up on Wednesday that will create one of the world’s biggest online betting businesses, worth about £6bn, and last month Ladbrokes and Coral agreed terms on a merger to form a £2.3bn company that will own the most betting shops in Britain.
Mor Weizer, Playtech’s chief executive, said that rather than stunting opportunities, consolidation should provide a fillip for the FTSE 250 business, which was founded by Israeli billion- aire Teddy Sagi. Playtech is already a Ladbrokes investor and will hold a stake in the bookmaker after its merger with Coral.
“We see this as an opportunity to further strengthen our relationship with them,” Mr Weizer said. “The beauty of the business model of Playtech is that it’s [based on] revenue-sharing agreements.”
If Playtech’s customers grow, then the software group stands to benefit too, Mr Weizer added. He was speaking as the company released half-year results that showed pre-tax profits rose 11.6pc to €85.8m (£62.6m) on revenues up 33.4pc to €286m. However, Playtech shares slid 2.7pc to 867p after the firm disappointed with current trading at its gaming division.
The industry’s M&A frenzy continued unabated yesterday when online gambling company Bwin.Party invited rival GVC to make a formal offer.
Bwin has already accepted a bid from 888, but GVC is attempting to gatecrash the deal. GVC has now been asked by Bwin to “clarify” the “best terms” that it can offer. The announcement by Bwin prompted 888 to hit back and claim its own bid “is of significantly greater intrinsic value” than a potential £1bn takeover by GVC.
Playtech is itself acquisitive and has struck deals with three financial trading firms this year. Mr Weizer said M&A was an “important element of our strategy” and he remained on the lookout for “opportunistic” deals.