The online gambling software company, Playtech, has announced that it will sell down its stake in the multinational sports betting and gambling group, GVC Holdings. Playtech owned 3.4% of GVC's issued share capital and is selling its stocks in their entirety. Playtech received these shares as a result of their previous holding in Ladbrokes Coral Group which was subsequently bought by GVC.
Playtech sold its holding of 19.6 million ordinary shares in GVC at a price of 1010 pence. Before broker commissions in a place that was conducted through Goodbody, UBS Limited and Shore Capital, Playtech raked in £198 million.
Plans for GVC Stock Sale
Playtech said that the funds it receives from the sale of its GVC stock will be "used for general corporate purposes which may include M&A or to reduce the amount of debt to be raised as part of the acquisition of Snaitech."
In a deal announced earlier this year and completed this month, Playtech acquired the Italian gaming giant, Snaitech. In March 2018, Playtech agreed to buy 70.6% of Snaitech's issued share capital for the price of €846 million. Since March, Playtech separately acquired a further 9% of the group's issued share capital through a number of market purchases. Following approval from the Italian gambling regulator, Agenzia delle Dogane e dei Monopoli last month, Playtech now owns nearly 80% of Snaitech.
The March deal requires that Playtech make a mandatory takeover offer for the remaining Snaitech shares.
Benefits of Snaitech Acquisition
According to a press release issued by Playtech upon its purchase of Snaitech, the group said that the acquisition created a leading vertically integrated retail and online Italian gaming business that would control its own technology across all products and verticals from land-based to online.
The purchase was in line with Playtech's strategy to invest in profitable, highly cash generative businesses that boasted strong management, similar DNA and attractive financial returns.
The press release went on to say that the acquisition significantly enhanced Playtech's revenue mix towards regulated markets, with 78% of the enlarged group's 2017 pro-forma revenues from regulated markets.
Playtech seeks to establish a strong presence in Italy, which it considers to be one of Europe's largest and fastest growing gaming markets but which is relatively underdeveloped online. The deal also builds on Playtech's historical success of developing online markets through structured agreements.
Key Strengths of Snaitech
At present, Snaitech holds the leading market position in retail betting in Italy, as well as one of the most extensive gaming machine networks and online positions in the country. The deal brings with it distinct competitive advantages, an experienced management team with successful operation and financial track record, and proprietary technology that is complementary to Playtech's technology platform.
"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 utilizing the strength of Playtech's balance sheet," noted Mor Weizer, the chief executive officer of Playtech.