TIDMPTEC
RNS Number : 6819K
Playtech PLC
12 April 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
12 April 2018
Proposed acquisition of Snaitech S.p.A by Playtech plc for
EUR846m funded by cash and new debt
Creating the first vertically integrated gaming operator with
material earnings accretion
The Board of Playtech plc ("Playtech" or the "Company") is
pleased to announce that Playtech has reached an agreement with
certain shareholders of Snaitech S.p.A ("Snaitech") to acquire an
approximately 70.6 per cent. of the issued share capital of
Snaitech (the "Initial Acquisition").
Upon completion of the Initial Acquisition, Playtech will be
required to make a mandatory takeover offer for all the remaining
shares in Snaitech (the "Mandatory Takeover Offer" and together
with the Initial Acquisition, the "Transaction"). Completion of the
Initial Acquisition is subject to certain regulatory and
shareholder approvals and is expected to occur in Q3 2018, with the
overall Transaction expected to complete in Q4 2018.
Strategic highlights
-- Creates leading vertically integrated retail and online
Italian gaming business that will control its own technology across
all products and verticals from land-based to online;
-- In line with Playtech's strategy to invest in profitable,
highly cash generative businesses with strong management, similar
DNA and attractive financial returns;
-- Significantly enhances Playtech's revenue mix towards
regulated markets, with 78% of the enlarged group's 2017 pro-forma
revenues from regulated markets;
-- Establishes strong presence in Italy, Europe's largest and
growing gaming market, a fragmented market which is relatively
underdeveloped online;
-- Builds upon Playtech's historical success of developing
online markets through structured agreements;
-- Combines two market leading players in the B2B / B2C space
with brand strength and scalable offerings and provides Playtech
with incremental organic growth potential and greater strategic
optionality; and
-- Key strengths and competitive advantages of Snaitech
include:
o the leading market position in retail betting, one of the most
extensive gaming machine networks and a strong online position in
Italy;
o distinct competitive advantages, underpinned by a strong brand
and extensive franchisee based distribution network;
o proprietary technology that is complementary to Playtech
technology platform; and
o experienced management team with a successful operational and
financial track record who will remain with Playtech post
acquisition.
Financial highlights
-- In 2017, Snaitech generated revenue and EBITDA of EUR890
million and EUR136 million respectively;
-- Total purchase enterprise value of EUR846 million(1) with
implied EV/EBITDA (pre-synergies) of 6.2x;
-- Expected material annual cost synergies of EUR10 million and
revenue synergies;
-- Transaction funded by a combination of existing cash
resources and new debt facilities;
-- Enlarged group net debt leverage of below 1.5x times 2017
EBITDA(2) ; and
-- Significant EBITDA enhancement(3) and double-digit EPS
accretion.
Commenting on the Transaction, Mor Weizer, Chief Executive
Officer of Playtech said:
"The acquisition of Snaitech represents the continuation of our
strategy to invest in leading retail brands in fast growing,
regulated markets. The acquisition delivers the Board's strategic
objective to improve the quality and diversification of Group
revenue, whilst delivering exposure to high growth end markets, by
utilising the strength of Playtech's balance sheet.
Playtech has always been at the forefront of its industry and
the acquisition offers the opportunity to create a vertically
integrated B2B2C operator in Europe's largest gambling market,
delivering significant value to shareholders."
Commenting on the Transaction, Fabio Schiavolin, Chief Executive
Officer of Snaitech said:
"This acquisition reflects Snaitech's position as one of the
leading and best known brands in Italy and delivers meaningful
value to our shareholders. The combination of Playtech's technology
and experience in Italy with Snaitech's powerful brand mean we will
be better able to capture the online opportunity in the fast
growing and dynamic Italian market. We are pleased to be joining
the Playtech team and look to the future with confidence and
excitement."
Presentation, webcast and conference call
Mor Weizer, Chief Executive Officer of Playtech, and Andrew
Smith, Chief Financial Officer of Playtech, will host a
presentation for analysts and investors today at 9:00am at the
offices of UBS, 5 Broadgate, London, EC2M 2QS.
The presentation will be webcast live and on demand at the
following website:
http://www.investis-live.com/playtech/5accbc33b45c1a0c003306e7/yuip
The presentation will also be accessible via a live conference
call:
Dial-in no. (UK): 020 3936 2999
Dial-in no. (other locations): +44 20 3936 2999
Conference ID: 562011
Replay (available for one week)
Dial-in no. (UK): 020 3936 3001
Dial-in no. (U.S): +1 845 709 8569
Dial in no. (other locations): +44 20 3936 3001
Replay conference ID: 617171
The live video webcast will also be available on the Playtech
website following the call.
For further information please contact:
Playtech plc +44 (0) 16 2464 5954
Mor Weizer, Chief Executive Officer
Andrew Smith, Chief Financial Officer
James Newman, Head of Investor
Relations
UBS Limited (Financial adviser,
Sponsor and Corporate Broker to
Playtech) +44 (0) 20 7567 8000
Tomer Jacob
Rahul Luthra
Sandip Dhillon
Goodbody Stockbrokers (Corporate
Broker to Playtech) +44 (0) 20 3841 6220
Piers Coombs
Charlotte Craigie
Headland (PR adviser to Playtech) +44 (0) 20 3805 4822
Lucy Legh
Stephen Malthouse
Morrow Sodali S.p.A. (Global Information Agent)
For any information in relation to the proposed Mandatory
Takeover Offer, Snaitech shareholders should contact:
opa.snaitech@morrowsodali.com
Domestic (toll free): 800 198 926
International: +39 06 4521 2832
Overview of Snaitech
Snaitech is one of the leading operators in the Italian gaming
and betting market with a broad portfolio of concessions granted to
it by Agenzie delle Dogane e dei Monopoli ("ADM"), the Italian
gaming industry regulator. Snaitech offers a wide range of gaming
and betting products, including gaming machines, sports and horse
race betting and virtual events and online sports betting and skill
and casino games. Snaitech is fully regulated in the markets in
which it operates.
In particular, Snaitech has one of the largest gaming and
betting machine networks in Italy comprising more than 1,600
betting points and approximately 54,000 AWPs and 10,000 VLTs. For
the financial year ended 31 December 2017, Snaitech reported total
revenues of EUR890 million, EBITDA of EUR135.9 million, pre-tax
profits of EUR41.6m and net profit of EUR27.0 million. As at 31
December 2017, Snaitech reported total gross assets of EUR934.7
million. At the end of December 2017 Snaitech employed a total of
848 employees across its business.
Overview of Playtech
Founded in 1999 and premium listed on the Main Market of the
London Stock Exchange, Playtech is a market leader in the gambling
and financial trading industries.
Playtech is the gambling industry's leading software and
services supplier to many of the world's leading regulated online,
retail and mobile operators, land-based casino groups, government
sponsored entities such as lotteries and new entrants opening
operations in newly-regulated markets. Its business
intelligence-driven gambling software offering includes casino,
live casino, bingo, poker and sports betting.
It is the pioneer of omni-channel gambling which, through
Playtech ONE, offers operators and their customers a seamless,
anytime, anywhere experience across any product, any channel
(online, mobile, retail) and any device using a single account and
single wallet. It provides marketing expertise, sophisticated CRM
solutions and other services for operators seeking a full turnkey
solution. Playtech's Financials Division, named TradeTech Group,
operates both on a B2C and B2B basis.
Playtech has in total c.5,000 employees across 17 countries.
Strategic and financial rationale for the Transaction
The proposed acquisition of Snaitech is in-line with Playtech's
stated strategy to:
-- Augment organic growth by utilising its strong balance sheet
to further diversify its geographical revenue and continually
increase quality of earnings, including from regulated revenue;
-- Accelerate EBITDA growth by consolidating its market leading
position in the gambling sector organically and through acquiring
high quality businesses in regulated, high-growth geographies and
industries;
-- Invest in brands and businesses that can survive future
changes in industry and consumer practices; and
-- Provide sufficient levels of free cash flow to continue the
Company's track record of delivering strong shareholder
returns.
The Transaction represents a unique and compelling opportunity
for Playtech and offers a number of benefits to Playtech
shareholders including:
-- The combination of two market leading players in
complementary industry sectors creating the leading vertically
integrated Italian business, which will control its own technology
across all products and verticals from retail to online;
-- Leverage Playtech's experience in the Italian B2B market and
combine its expertise with Snaitech's similar DNA to drive an
increase in its market share in the region, while taking advantage
of the positive growth dynamics;
-- Unlock material run-rate cost synergies of c. EUR10 million
per annum and achieve further revenue synergies through further
distribution of Playtech products through Snaitech's network,
optimising the online offering through Playtech's product,
operational and marketing expertise;
-- Deliver substantial overall financial returns, including
material EBITDA enhancement and double-digit EPS accretion in the
first full year post consolidation, as well as a continued strong
cash flow and shareholder returns profile for the enlarged
group;
-- Further diversification of Playtech's revenue mix, with 78%
of the enlarged group's 2017 pro-forma revenues from regulated
markets and 75% from UK and Europe;
-- Combination of two market leading players in the B2B / B2C
space with brand strength and scalable offerings and provides
Playtech with incremental organic growth potential and greater
strategic optionality; and
-- Leverage the substantial knowledge and experience of both
management teams in order to develop and grow the enlarged
group.
Snaitech management team
Snaitech's senior management team comprises individuals with
extensive experience in the Italian gaming and betting industry.
The CEO, Fabio Schiavolin, was one of the original co-founders of
the Cogemat Group, which grew from a small operator into an
established player in the Italian gaming market. Following the
acquisition of Cogemat by Snaitech in 2015, Snaitech's management
team was strengthened by the integration of the Cogemat Group's
experienced senior managers into the management team of
Snaitech.
The Transaction allows Playtech and Snaitech to leverage the
substantial knowledge and experience of both management teams in
order to develop and grow further in their respective markets. Both
management teams also have successful track records of integrating
new businesses post-acquisition.
Fabio Schiavolin and other key members of the Snaitech senior
management team will be retained as part of the Transaction and
Playtech is delighted to confirm that Mr Schiavolin will continue
as CEO of Snaitech.It is not envisaged that any new directors will
be proposed to the Playtech Board as a result of the
Transaction.
Key terms of the Transaction
Initial Acquisition
For the purpose of the Initial Acquisition, a share purchase
agreement (the "SPA") has been entered into between Pluto (Italia)
S.p.A (the "Buyer"), an indirect wholly-owned subsidiary of the
Company, as the purchaser, the Company, as the guarantor of the
Buyer's obligations, and Global Games S.p.A and OI Games S.A.
(together, the "Sellers") where the Buyer has agreed to purchase
all of the Sellers' respective holdings in Snaitech for a total
cash consideration of EUR291 million, representing EUR2.19 per
share (the "Consideration").
Completion of the Initial Acquisition is conditional upon (i)
the approval of the Transaction by the shareholders of Playtech;
(ii) receipt of any required approval from any relevant anti-trust
authority, if and to the extent required under applicable law; and
(iii) the consent of ADM, the Italian gaming regulatory authority,
to the Transaction being obtained. If these conditions are not
satisfied on or prior to 9 August 2018, which date can be extended
by 30 days at the request of the Buyer or Global Games S.p.A, the
agreement between the Buyer and the Sellers will terminate.
The SPA also provides a withdrawal right in favour of Playtech
in the event that a there is a material adverse effect (as
contractually defined) of Snaitech before completion of the Initial
Acquisition.
Mandatory Takeover Offer
If the Initial Acquisition completes, the Buyer will own 70.561
per cent. of the voting shares in Snaitech and will be required to
make the Mandatory Takeover Offer. Playtech expects to notify
Consob and announce to the public the occurrence of the obligation
to make the Mandatory Takeover Offer immediately following
completion of the Initial Acquisition.
The Mandatory Takeover Offer must be made at a price per share
not lower than the highest price paid by the Buyer (or persons
acting in concert with it) in the 12 months preceding the offer
notice to Consob. The Buyer therefore will make the Mandatory
Takeover Offer at the Consideration price of the Initial
Acquisition, being EUR2.19 per share in cash.
The Mandatory Takeover Offer is aimed at the delisting of
Snaitech. Should the delisting not be achieved at the end and as an
effect of the Mandatory Takeover Offer, the delisting may be
achieved by means of a merger between Snaitech and the Buyer.
Transaction value
The Consideration payable for 100% of the outstanding share
capital of Snaitech represents:
-- a premium of approximately 17.0 per cent. based on the
Snaitech share price of EUR1.87 (being the closing price on the
last business day prior to this announcement);
-- a premium of approximately 27.0 per cent. based on the three
month volume weighted average share price of Snaitech;
-- a total value for the outstanding ordinary share capital of
Snaitech of approximately EUR413 million;
-- a total enterprise value of Snaitech of EUR846 million(4) ; and
-- a historical 2017 EV/EBITDA Transaction acquisition multiple of 6.2x(5) .
Funding of the Transaction
Playtech will fund the Transaction, including any potential
refinancing of Snaitech's existing debt, through a combination of
its own cash resources, and new debt financing totaling
approximately EUR1.0 billion (the "Transaction Financing").
It is expected that the Transaction will leave the enlarged
group with pro-forma net debt leverage of below 1.5 times 2017
EBITDA (excluding the Playtech convertible bond), with a strong
cash flow profile to pay down debt over the medium term.
Playtech expects to refinance the Transaction Financing by
accessing the debt markets in due course, at which time Playtech
may also seek a corresponding credit rating, in order to ensure a
sustainable long-term capital structure for the enlarged group
which utilises the combined strong free cash flow profile of both
businesses.
Playtech dividend policy
As a result of the Transaction Playtech expects no change to the
progressive dividend policy it adopted in 2016.
Playtech current trading
Playtech's current trading is in-line with the update provided
in the full year results announcement on 22 February 2018, and
management remain confident of good growth in 2018 with continued
improvement in quality of earnings.
Snaitech current trading
Snaitech's current trading is in-line with the update provided
at the full year results on 16 March 2018.
Expected Transaction timetable
The parties currently anticipate that, subject to the required
approvals, the Initial Acquisition will complete by Q3 2018, and
the Mandatory Takeover Offer will complete by Q4 2018.
Recommendations and approvals
The Transaction, because of its size in relation to the Company,
is a Class 1 transaction under the UK Listing Rules and is
therefore conditional, amongst other things, upon the approval of
the Company's shareholders. As a result, Playtech expects to
publish a circular in connection with the Transaction and convening
a general meeting of the Company (the "General Meeting") in due
course.
The directors of Playtech consider the Transaction to be in the
best interests of Playtech and its shareholders as a whole and
intend to unanimously recommend that Playtech shareholders vote in
favour of the Transaction at the General Meeting which will be
convened in connection with the Transaction.
- Ends -
IMPORTANT NOTICE:
This announcement contains inside information as defined under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR").
This announcement has been issued by, and is the sole
responsibility of, Playtech.
The person responsible for making this announcement is James
Newman, Head of Investor Relations.
UBS Limited ("UBS") is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority. UBS is
acting exclusively as Financial adviser, Sponsor and Corporate
Broker to Playtech plc and no one else in connection with the
Transaction and shall not be responsible to anyone other than
Playtech plc for providing the protections afforded to clients of
UBS nor for providing advice in relation to such matters.
Goodbody Stockbrokers UC, trading as Goodbody, is regulated by
the Central Bank of Ireland. In the UK, Goodbody is authorised and
subject to limited regulation by the Financial Conduct Authority.
Goodbody is a member of the Irish Stock Exchange and the London
Stock Exchange. Goodbody is a member of the FEXCO group of
companies. Goodbody Stockbrokers UC is acting as Corporate Broker
to the Company and no one else for the purpose of the matters set
out herein.
Further information:
This announcement is for information purposes only and is not
intended to and does not constitute or form part of any offer or
invitation to purchase or subscribe for, or any solicitation to
purchase or subscribe for securities in the Company in any
jurisdiction.
Overseas jurisdictions:
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law. Persons who are not
resident in the United Kingdom or who are subject to the laws of
other jurisdictions should inform themselves of, and observe, any
applicable requirements. Any failure to comply with these
restrictions may constitute a violation of securities laws of any
such jurisdictions. To the fullest extent permitted by law,
Playtech disclaims all and any responsibility or liability for the
violation of such restrictions by such person.
Cautionary note regarding forward looking statements:
This announcement contains certain forward looking statements
with respect to the financial condition, results of operations and
businesses of Playtech, the Playtech group and following completion
of the Initial Acquisition, the enlarged group, and certain plans
and objectives of Playtech. All statements other than statements of
historical fact are, or may be deemed to be, forward looking
statements. Forward looking statements are statements of future
expectations that are based on management's current expectations
and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in
these statements. Forward looking statements include, among other
things, statements concerning the potential exposure of Playtech to
market risks and statements expressing management's expectations,
beliefs, estimates, forecasts, projections and assumptions,
including as to future potential cost savings, synergies, earnings,
cash flow, return on average capital employed, production and
prospects. These forward looking statements are identified by their
use of terms and phrases such as "anticipate", "believe", "could",
"estimate", "expect", "goals", "intend", "may", "objectives",
"outlook", "plan", "probably", "project", "risks", "seek",
"should", "target", "will" and similar terms and phrases.
Each forward looking statement speaks only as of the date of
this announcement. Save as required by law or by the Listing Rules
of the UK Listing Authority, none of Playtech or the Playtech group
undertakes any obligation to publicly update or revise any forward
looking statement as a result of new information, future events or
otherwise, except to the extent legally required. In light of these
risks, results could differ materially from those stated, implied
or inferred from the forward looking statements contained in this
announcement.
Rounding:
Certain figures included in this announcement have been
subjected to rounding adjustments. Accordingly, figures shown for
the same category presented in different tables may vary slightly
and figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures that precede them.
1 Based on total implied 100 per cent. value for the outstanding
ordinary share capital of Snaitech of EUR413 million and comprising
net debt of EUR429 million, pension liability of EUR7 million and
investment in associates of EUR(2) million
2 Excluding the Playtech convertible bond
3 On a pro-forma 2017 basis
4 Based on net debt of EUR429 million, pension liability of EUR7
million and investment in associates of EUR(2) million
5 Based on a 2017 EBITDA of EUR135.9 million for Snaitech
This information is provided by RNS
The company news service from the London Stock Exchange
END
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