Playtech to Buy Software Business From Co-Founder Sagi
Playtech Ltd. (PTEC), the Internet- gambling software maker that has a venture with William Hill Plc (WMH), agreed to buy a software business from a company owned by its co-founder and biggest shareholder, Teddy Sagi.
Playtech will pay as much as 280 million euros ($387 million) for PT Turnkey Services Ltd., the Isle of Man-based company said in a statement today. Full-year net income dropped 6.9 percent, as Playtech wrote down the value of investments, the company said in a separate statement. The shares fell the most since Jan. 25.
The Turnkey deal, to be paid in cash in instalments, will allow Playtech to become a single-source supplier of services including marketing, web hosting, payments and search-engine placement, Chief Executive Officer Mor Weizer said in a telephone interview.
“In newly regulated markets, the leading local brands, land-based operators, are very much interested in becoming online operators,” he said. PT Turnkey will let customers set up Internet gambling operations right away, he said.
The deal qualifies as a related-party transaction as the seller, World Online Enterprises Ltd., is beneficially owned by Sagi, who owns 40.4 percent of Playtech through Brickington Trading Ltd. Playtech is paying a fair price, based on an opinion from its adviser, Collins Stewart Plc, Weizer said.
‘Suspicious’
Nick Batram, an analyst with Peel Hunt, wrote that offering a comprehensive range of services is appealing to clients.
“The alternative view is that the deal will dilute the pure technology-software story and, furthermore, the market is often suspicious of connected-party transactions,” wrote Batram, who has a “hold” recommendation on the company.
Playtech dropped 15.75 pence, or 4.3 percent, to 352.25 pence in London. The shares have declined 17 percent this year, giving it a market value of 854.7 million pounds ($1.4 billion).
Full-year net income was 64.7 million euros, or 25.7 cents per share, compared with 69.5 million euros, or 28 cents, a year earlier. Sales increased 24 percent to 142.3 million euros.
Casino sales grew 26 percent to 96.7 million euros as the company added 76 new games. Poker revenue fell 19 percent to 27.4 million euros as competition grew, the company said. Bingo sales gained to 10.9 million euros from about 200,000 euros a year earlier.
Revenue from its online venture with William Hill climbed 37 percent to 30.8 million euros, the company said.
On Feb. 22, William Hill said it secured an interim injunction against Playtech, saying that company is seeking to amend its agreements. It also cited “speculation” about talks between Playtech and William Hill rival, Ladbrokes Plc. (LAD)
Weizer said today he couldn’t comment on the William Hill legal action.
To contact the reporter on this story: David Altaner in London at daltaner@bloomberg.net
To contact the editor responsible for this story: Colin Keatinge in London at Ckeatinge@bloomberg.net
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