Breaking: Playtech Raises Additional Capital to Fund Acquisitions

The additional funds can be used to strengthen its bid for Plus500, or to acquire another "mid-size broker"

Teddy Sagi’s Playtech has just announced it’s raising funds via a placing of up to 29,050,000 ordinary shares with the price per placing share to be determined through an accelerated bookbuild. The placing represents approximately 9.9% of the company’s current issued share capital Brickington, the Playtech’s largest shareholder with an interest in 33.6% of the existing shares, intending to take up 33.6% of the placing so as to maintain its current shareholding.

The company explained the need for the process, saying that Playtech has a strategy to acquire profitable, regulated, cash generative businesses with market leading positions. Finance Magnates’ extensive analysis refers to this strategy as “multipliers arbitrage”, where Sagi is relying on his ability to float rising firm with higher worth.

Today the group explained that placing proceeds will be used to fund future acquisitions including Plus500, and potentially, a midsize retail broker over which TradeFX has an option to purchase. Playtech is in the process of securing debt facilities in order to maximise the group’s capital efficiency in the context of its ongoing acquisition strategy.

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Sending a Message

This announcement could also be a way of sending a message to anyone who might get in the way of Playtech’s Plus500 acquisition. The message being sent to the other potential bidders is that Playtech is ready to up the ante and they should not try to acquire Plus500 unless they are ready for a bidding war. For reluctant Plus500 shareholders, such as Odey Asset Management that called Playtech’s offer “opportunistic,” it sends a message that the company will not let this go and is already looking for its next opportunity.

Mor Weizer, Chief Executive Officer of Playtech, commented: “Playtech’s enviable M&A track record has been founded on its ability to be pro-active, facilitated by financial flexibility which has allowed it to be able to act from a position of strength. Today’s equity fundraising, in conjunction with new debt facilities, which we are in the process of securing, will improve the efficiency of Playtech’s capital structure whilst maintaining the financial flexibility to pursue acquisitions in both the gambling and financial trading space to deliver long term value for our Shareholders.”

Playtech has appointed Canaccord Genuity as Sponsor and Joint Bookrunner, UBS as Joint Bookrunner and Shore Capital as Lead Manager to the placing. Books are open with immediate effect.

The Company Also Released Current Trading Metrics

  • Relating to Playtech’s core business, average daily run rate revenue for Q2 2015 is up over 25 per cent in Q2 2014
  • The TradeFX business has continued to perform strongly with revenues up until May 31, 2015 of US$42.2 million (same period in 2014 – US$24.5 million) and:
  • FTDs for core CFD B2C business up until May 31, 2015: 18.2k (up from 13.6k during same period in 2014)
  • Active customers for core CFD B2C business up until May 31, 2015: 32.0k (up from 24.6k during same period in 2014)
  • The Board remains confident for a strong growth in 2015 and beyond.

Update

Playtech announced at the middle of the trading day that the full amount of 29,050,000 new ordinary shares have been placed at a price of 780 pence per placing share, raising gross proceeds of approximately £227 million (before expenses).

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