Gopher Investments Bids $250M for Playtech Finalto Unit, Tops Management-Led Offer

Posted on: July 4, 2021, 04:12h. 

Last updated on: July 4, 2021, 05:27h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Gopher Investments is offering $250 million in cash to acquire Playtech’s (OTC:PYTCY) Finalto business. It’s a bid the suitor says is well ahead of the pitch made by Finalto management.

Finalto Gopher
Playtech executives at the London Stock Exchange. There’s a battle brewing for the company’s Finalto unit. (Image: Times of Israel)

The investment firm’s pitch is $80 million, or 47 percent above what Finalto management — backed by a consortium led by Barinboim Group — is proposing.

Gopher’s all-cash offer includes no deferred or contingent component, delivering full value up-front and allowing Playtech to receive proceeds with certainty and in full on completion, securing the clean break which the Board has declared as an objective of the transaction. Gopher’s offer will be financed from funds which are immediately available,” according to a statement issued by the Hong Kong-based money manager.

Gopher adds that its bid is $65 million, or 35 percent in excess of the consortium’s guaranteed consideration, and $40 million, or 19 percent, above “the maximum consideration payable by the consortium, including full contingent consideration.”

Overall, the Gopher bid represents an enterprise value/earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of 27.2x as of April, notes the suitor.

Gopher Supports Divesting Finalto

The asset manager doesn’t contest the notion that Finalto, which makes financial services software, is a non-core asset for Playtech, a company that primarily focuses on the gaming industry.

However, Gopher asserts the consortium’s offer doesn’t adequately value Finalto relative to what it calls “attractive growth prospects.” The suitor also takes issue with the fact the Finalto board is endorsing the Barinboim Group-led proposal.

Gopher is looking to play another card. It’s an affiliate of TT Bond Partners, which has prior experience in evaluating and managing technology-based financial services assets.

“With additional investment and expansion of certain product areas and geographies, TTB believes the Finalto business could significantly improve its stability of performance and increase its profitability,” according to the statement. “TTB has worked with its portfolio investments on developing strategic growth plans, and believes that, under its ownership, Finalto would have the potential for significant additional expansion.”

Playtech Draws More Activity Among Investors

Founded in Estonia more than two decades ago and headquartered in the Isle of Man, Playtech makes software for internet casinos, web-based poker rooms, and online sports wagering. That makes the company somewhat comparable to GAN Ltd. (NASDAQ:GAN).

The current tussle between the company and Gopher can be seen as another example of investors making their voices heard when it comes to corporate actions. For example, SpringOwl Asset Management CEO Jason Ader said last year that DraftKings (NASDAQ:DKNG) should acquire Playtech, though nothing has come of that advice. Ader’s firm owned about five percent of Playtech at the time.

As for the Gopher/Finalto situation, the latter holds a general meeting on July 15. The suitor is urging investors to vote against the consortium-led proposal.