Gambling software company Playtech (LSE: PTEC) today released a statement that it will soon be buying back up to 6,000,000 of its issued ordinary shares, or 1.85 percent of the company’s current outstanding shares, valued at nearly €50 million ($53.70 million). The FTSE 250 company said the move demonstrates the substantial opportunities that are available to drive future growth, as well as its high cash generation.
Recent estimates suggest that Playtech’s current market capitalisation is £2.591 billion ($3.30 billion). The company, which was founded by Israeli entrepreneur Teddy Sagi and counts Ladbrokes and Coral as customers, has been trading on the London Stock Exchange since 2006.
Following this news, Playtech’s stock dropped from above 823p to as low as 807p within about an hour’s time, although the stock has since bounced back. The stock traded recently at 812p, down about 1.7 percent on the day.
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In a statement to London Stock Exchange, Playtech said that it aims to reduce the Company’s share capital by means of purchasing its ordinary shares from time to time using existing cash resources. The buy-back programme will be conducted by its broker Canaccord Genuity Limited in accordance with the terms of the general authority to make market purchases of its own shares given to the company.
Playtech also added that the Buyback Programme has no impact on its M&A strategy and should the markets offer an opportunity to purchase shares at compelling valuations, it has the ability to utilise a portion of our cash resources for the benefit of shareholders.
The company will be embarking soon on the buy-back program, which will continue until purchasing the maximum amount or December 31, 2016, whichever is sooner. Once re-purchased, the shares will be cancelled, the company said.
Commenting on recent consultation papers issued by the FCA and CySEC, the software group said: “Playtech has always aimed to operate its financials division at the very highest standards of regulation and therefore confirms that last week’s publication by the Cyprus Securities and Exchange Commission and today’s proposals from the Financial Conduct Authority are not expected to have a material impact on Playtech’s financials division.”