Why the Aristocrat Leisure (ASX:ALL) share price is one to watch today

Aristocrat's shares will be on watch today…

| More on:
mobile phone depicting online casino next to cards, casino chips and roulette wheel

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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  • Rival bidder, JKO Play, has withdrawn its higher offer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.

Motley Fool contributor James Mickleboro 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.

More on Mergers & Acquisitions

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Mergers & Acquisitions

APM share price placed on ice as $1.8 billion deal goes dud

It's all question marks and raised eyebrows for shareholders of this ASX company today.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
Mergers & Acquisitions

Could Star Entertainment shares be next in line to catch a takeover bid?

Star shares have been battered, but could a buyout be coming?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

Man pointing at a blue rising share price graph.
Mergers & Acquisitions

Guess which ASX 300 stock is rocketing 10% on a $985 million cash bid!

Investors are piling into the ASX 300 stock on the back of a $985 million cash takeover bid.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Mergers & Acquisitions

Guess which ASX blue-chip share is throwing $202 million at another acquisition

This Aussie healthcare company is growing its presence in Switzerland.

Read more »

A man stands with his arms crossed in an X shape.
Mergers & Acquisitions

Boral share price falls after rejecting Seven Group takeover

The offer 'undervalues' Boral according to its committee.

Read more »

Miner looking at a tablet.
Materials Shares

Mineral Resources share price marching higher on new lithium project acquisition

ASX 200 investors are bidding up the Mineral Resources share price on Monday.

Read more »

A man sitting at a computer is blown away by what he's seeing on the screen, hair and tie whooshing back as he screams argh in panic.
Technology Shares

Appen shares plunges 17% after takeover collapse

Well that didn't take long...

Read more »