The Aristocrat Leisure Limited (ASX: ALL) share price remains halted today after the company announced its $5 billion proposed acquisition of Playtech yesterday. In response, the London-traded gambling software company soared 56% in value.
Aristocrat's move to gain a foothold in the online gaming market makes it the company's largest acquisition to date.
While shares in the ASX-listed acquirer are still frozen today, it might be useful to take a closer look at the details of the proposed deal. In addition, we will establish when Aristocrat Leisure shares might resume trading.
Strategic move into online
Residing in the S&P/ASX 200 Index (ASX: XJO), Aristocrat Leisure has become a staple of the Australian share market over the years. For a long time, the gaming machine manufacturer has operated a highly profitable business with a solid track record of growth.
However, when restrictions and lockdowns swept across the world, the company was impacted by its reliance on in-person gaming. This was reflected in a short-lived weakness in the Aristocrat share price. Meanwhile, online gaming companies charged forth through COVID-19 with many consumers turning to the online alternative.
As a result, Aristocrat Leisure is seeking to obtain its share of the US$70 billion online gaming segment via Playtech. If the deal goes through, Aristocrat will be armed with a broader range of solutions for its customers, catering to both physical and online gaming needs.
The price being paid (A$5.2 billion) for Playtech represents an 11.4 times multiple on its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) for the last financial year. Considering it's the third time Aristocrat has kicked the tyres on Playtech, analysts are somewhat comforted it's a reasonable amount.
For investors, the Playtech acquisition offers an open door to the fast-growing online real money gaming (RMG) market. According to Aristocrat, this market is expected to grow at a compound annual growth rate of 13%. In fact, by 2025, the total addressable market is expected to reach US$11 billion.
When will the Aristocrat share price trade again?
At this point in time, Aristocrat Leisure shares are halted while the company raises capital for its acquisition. This involves a retail offer and an institutional offer.
If all goes to plan, the institutional offer should be filled and closed by the end of tomorrow. Subsequently, the Aristocrat Leisure share price should then resume trade on Thursday 21 October 2021.
Finally, the retail portion of the capital raise will open on Monday next week. At the time of writing, the Aristocrat Leisure share price is frozen at $45.79 apiece.
