Owners of Aristocrat Leisure Limited (ASX: ALL) shares are likely excited by its potential takeover of London-listed, Playtech Plc.
However, the company’s $5 billion takeover offer is still working its way through certain obstacles, including a rival bidder.
But, if successful, the takeover will see the company operating in the ‘real money gaming’ (RMG) space – one which is illegal in Australia.
At the time of writing, the Aristocrat Leisure share price is $42.58, the same as its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) is down 0.54% right now.
Let’s take a closer look at the deal and what it could mean for the gaming technology company.
Can RGM boost the Aristocrat Leisure share price?
The Aristocrat Leisure share price is currently 6% lower than it was when it announced its plan to acquire gaming software supplier, Playtech.
Still, many in the market are excited about the company’s break into contentious RMG offerings.
RMG is online betting that sees users gambling with real money. Generally, games that offer users the option to buy tokens or the likes to bet on games aren’t considered RMG.
RMG is banned under Australia’s Interactive Gambling Act 2001. However, according to Morgans, the United States RMG market is expected to be worth US$70 billion (around $98 billion) in the future.
Playtech has already broken into the RGM market. Thus, the takeover could see the company with an entirely new growth market.
Mogan senior analyst Alexander Mees commented on Aristocrat Leisure’s planned takeover and what it could mean for the company’s shares:
It expands and diversifies [Aristocrat Leisure’s] total addressable market from a $230 billion market comprising land-based gaming and mobile games, to a $300 billion market that will now include online RMG.
The broker slapped a $52.90 price target on Aristocrat Leisure’s shares in the wake of the acquisition’s announcement.
It has since lowered that guidance to $51.50. That still represents a 20% upside on its current level.
Right now, the Aristocrat Leisure share price is 36% higher than it was at the start of 2021.