Rating agency Fitch is confident that Aristocrat Leisure Limited will continue to invest heavily in the mergers and acquisitions (M&A) segment with the company tipped to spend as much as AU$100 million ($71 million) annually in order to maintain its momentum and add valuable assets that will consolidate its standing in the land-based and digital gaming sectors.
Aristocrat Retains Strong Financial Performance
Fitch commented on the company’s prospects in a new report issued on Wednesday in which it said that the company had done a good job of maintaining key financial metrics, including its credit and overall balance. The company was operating within its stated net 2.5x leverage target, the report added.
It was this financial discipline, Fitch explained, that allowed Aristocrat to pursue M&A more aggressively over the next days. The company also has a lot of money on its hands to play around with. Previously, it attempted to take over Playtech, a UK igaming content and platform developer, which was cut short, leaving the company with an estimated AU$1.3 billion ($926 million) to spend on the procurement of new assets and boosting its existing verticals.
This “failed move” has enabled the company to tinker with its war chest and seek fresh opportunities. One particular angle it has been exploring is the acquisition of more assets that have to do directly with the real-money gaming sector, an important part of the overall casino experience that is expected to gain more important dimensions over the coming years. Fitch further clarified Aristocrat’s financial standing:
“ALL’s credit profile has headroom for M&A and Fitch expects future acquisitions to be funded in a manner that is consistent with ‘BBB-‘ leverage metrics.”
Fitch Ratings
Digital Expansion Bolsters Overall Results
The company commented on previous acquisitions carried out until now as one of the reasons why Aristocrat was in a good position. Fitch particularly touted the acquisitions of Big Fish and Plarium which gave the company a strong boost in its digital business.
While Aristocrat has been focusing on its land-based and digital businesses separately, and there is little overlap between the two, Fitch is confident that the company has been making the correct decisions to consolidate its decision in both segments.
The report notably mentioned that Aristocrat’s digital products managed to grow by more than 30% during the 2020 lockdowns experienced globally, which helped the company make up for the losses in its legacy slot segment. Aristocrat is set to actively pursue its M&A strategy to bolster results and continue building upon its overall content portfolio.