Key points
- Aristocrat is aiming to acquire UK listed Playtech for $5 billion
- Rival bidder, JKO Play, has withdrawn its higher offer
- There are concerns that a large group of Asia-based investors wouldn't accept JKO Play's higher offer
- This could mean the lower Aristocrat offer is not approved by Playtech shareholders next week
The Aristocrat Leisure Limited (ASX: ALL) share price will be on watch this morning.
This follows the release of an update on its proposed $5 billion acquisition of UK listed real money gaming company Playtech.
Why is the Aristocrat share price on watch?
The Aristocrat share price will be on watch today after it revealed that one of its biggest rivals in the pursuit of Playtech has pulled out of the race.
According to the release, on Friday rival suitor JKO Play confirmed that it does not intend to make an offer to acquire Playtech.
This could be a big win for Aristocrat as JKO Play was proposing an offer of 750 pence per share for Playtech, which is higher than its own offer of 680 pence per share.
The company said: "The Playtech Board Recommended Acquisition remains the only firm offer available to Playtech shareholders, despite the substantial amount of time provided to potential bidders to make alternative proposals. Aristocrat further confirms that the regulatory approvals process remains well on track, and it is committed to completing the acquisition as quickly as possible. Aristocrat reiterates that the terms of the Recommended Acquisition provide full and fair value for Playtech shareholders, with attractive cash certainty."
What's next?
Playtech shareholders will soon vote on Aristocrat's proposal at a meeting on 2 February.
However, what will happen at the shareholder meeting remains uncertain. This is because, as the Financial Times has reported, a large group of Asia-based investors have been building a ~27% stake in Playtech.
These investors are understood to be planning to obstruct any deal that does not meet their valuation of the company and are believed to be the reason why JKO Play and a previous bidder withdrew offers.
Given that JKO Play has withdrawn a higher offer than Aristocrat's proposal, if these reports are accurate, it seems unlikely that this group will vote in favour of its proposal.
Aristocrat appeared to acknowledge this risk. It commented: "Aristocrat also notes comments in Playtech's announcement regarding a number of material investors who have not to date engaged meaningfully about their views on the Recommended Acquisition. Aristocrat urges all Playtech shareholders to vote in favour of the Recommended Acquisition at the relevant shareholder meetings to be convened on 2 February 2022."
All eyes will be on that vote early next month.
