Playtech’s shares have dropped by more than 18% after its third-largest stakeholder, TTB Partners, abandoned its plans to acquire the online gambling and sports betting supplier. The news of the failed purchase scared investors and the share drop resulted in a $355 million loss for Playtech.
TTB Partners Cited Market Challenging Conditions as the Main Reasons for Backing Down
The investment and advisory firm, which is based in Hong Kong, confirmed the news on Thursday (July 14) and it cited market challenging conditions as the main reason why it decided not to purchase the supplier.
TTB had a deadline until July 15 to confirm whether it will make a bid to acquire Playtech or not and the two companies were in advanced discussions for months. The negotiations began back in February after Playtech announced that the Aristocrat takeover crumbled.
Even though it was rumored that Playtech will be shut down if the Aristocrat bid falls through, the company went on with its operations, and soon after, the supplier started its negotiations with TTB. Originally, TTB was interested in pursuing an all-cash deal and because the negotiations were slow, Playtech gave TTB an extension of the negotiations.
In a joint statement, the CEO of Playtech, Mor Weizer, and current investor, Tom Hall, stated that the economic state of the world at this time is challenging and the market conditions are not the same as the ones in February when the negotiations began.
They stated that these conditions “made it impossible” to create a structure for the new company.
Playtech Is Confident in Its Long-Term Growth
In the statement where TTB confirmed that it will back down from the acquisition, the company stated that it will continue to support the board. As for the challenging period that lies ahead, Weizer stated that Playtech remains confident in its long-term growth.
He added that Playtech secured few deals that allowed the company to enter new markets and in 2021, the supplier reported a 12% revenue increase. Furthermore, it expects to have more than $200 million in adjusted EBITDA for the first half of 2022.
To make sure that the company’s profits remain on the positive side, Playtech decided to sell its financial trading division Finalto. In mid-June, the supplier confirmed that it received the necessary regulatory approvals to sell Finalto to Gopher Investments, Hong Kong-based company. The deal was approved by Playtech’s shareholders back in December 2021 and Gopher Investments agreed to pay $250 million cash-only. Originally, Gopher was in advanced talks to purchase Playtech, however, the company decided to back down and thus, gave space for Playtech to start its negotiations with Aristocrat.