Aristocrat (ASX:ALL) share price slides amid takeover update

A spanner might have been thrown into the works of Aristocrat Leisure’s Playtech deal…

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The Aristocrat Leisure Limited (ASX: ALL) share price fell by the wayside today. This comes after the gaming technology company shared an update regarding its attempt to acquire leading global online gambling software supplier, Playtech.

By the end of Monday’s session, shares in Aristocrat Leisure were trading 2.1% lower to $47.25. As a result, the company is now trading 4.8% below its 52-week high.

Let’s take a deeper look at the latest ASX announcement for Aristocrat Leisure.

Playing snakes and ladders with Playtech

Despite having already successfully raised $895 million in capital to fund the Playtech acquisition, Aristocrat Leisure has now encountered a potential roadblock.

According to today’s release, Playtech has now entered a dance of courtship with another party. The company received a preliminary approach from Hong Kong-based Gopher Investments, which might amount to a bid of £3 billion (~A$5.46 billion).

Reportedly, Gopher Investments began building its position earlier this year and has become a substantial shareholder in Playtech. At this stage, Gopher has merely sought access to information in order to conduct due diligence. As such, a formal offer may not eventuate, though it can’t be ruled out either.

This development throws a spanner in the works of what looked like a likely deal for the ASX-listed Aristocrat Leisure. Currently, the Aussie gaming company has mostly solidified a deal with Playtech valuing it at approximately A$5 billion.

To raise these funds, the company is issuing 31 million new shares which are expected to hit the ASX in mid-November. Running the numbers, this would represent a dilution of roughly 4.8% of the company’s current shares on issue.

Perhaps the market is concerned Aristocrat will be stuck with $1.3 billion worth of cash and nothing to put it towards.

Lastly, the timing of the announcement is almost uncanny. Today was the last day for the retail component of the capital raise. This would see a further expected A$405 million collected from retail investors.

What’s next for ASX-listed Aristocrat?

Today’s announcements stated that the company would continue to work with Playtech to progress its own acquisition proposal. In fact, the scheme document was mentioned to be published ‘shortly’, recommending shareholders recommend the acquisition.

Finally, Aristocrat noted it would share any further updates relating to its new potential competition. The Aristocrat Leisure share price remains 51% higher year-to-date.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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