Playtech delays decision after receiving second bid for Finalto

Playtech has received a late rival bid for Finalto from Gopher Investments.

UK.- Playtech has put back the general meeting scheduled for this week at which shareholders were to vote on Barinboim Group’s bid for the company’s financial trading division Finalto.

The FTSE250-listed gaming operator’s board reached an agreement to sell Finalto (formerly TradeTech) to a consortium led by the Israeli investment group for around $210m. Shareholders were to vote on the bid on July 15. 

The offer, which is backed by Leumi Partners and Menora Mivtachim Insurance, is due to comprise an initial payment of $185m, with $15m deferred for up to two years, plus a further $25m dependent on cash flow or other criteria after completion of the deal.

However, Gopher Investments, an existing Playtech shareholder, has now put forward a rival $250m all-cash bid. It called on Playtech’s board to put back the general meeting in order to enter negotiations.

The general meeting will now be held on July 29 to allow the board and shareholders to consider the new development.

Agreement with Barinboim

Playtech’s board is tied to the terms of its agreement with the Barinboim consortium, under which it is not able to engage with other parties over the sale of Finalto. Breaking those terms would mean Playtech having to pay $8.8m under a break clause.

However, Gopher has added a break clause to its own offer, under which it would have to pay Playtech $10m if it failed to enter into an official sale and purchase agreement on “materially equivalent” terms to those of the Barinboim bid within three weeks of the due diligence process beginning.

Gopher would also have to pay the fee if the deal failed to receive regulatory approval. The clause could persuade Playtech to consider the offer by covering the financial penalty for pulling out of the Barinboim agreement.

Playtech said: “The indicative proposal from Gopher is non-binding and is subject to a number of conditions, therefore there can be no certainty that the transaction proposed by Gopher would proceed to sign or completion. 

“The consortium offer has been signed and is binding, but remains subject to shareholder and regulatory approval, and as such there can be no certainty that the consortium offer will proceed to completion.”

The Barinboim consortium said in a statement: “The consortium recognises Playtech’s fiduciary duty to its shareholders and is pleased that Playtech and its shareholders will now have the opportunity to scrutinise the recent indicative non-binding interest for Finalto from Gopher Investments.”

It argued, however, that there were doubts over Gopher’s ownership and source of funds. It has suggested that the fund may have a connection to China, something that could cause regulatory approval issues.

It said: “Since Gopher announced its indicative non-binding interest on 2nd July 2021, it has revealed very little information on itself, the source of its funds and its ultimate controlling parties, all of which will be heavily scrutinised by regulators. 

“To the best of the consortium’s knowledge, Gopher has failed to properly answer even basic questions on these matters, which should be of great concern.”

Barinboim said that although Playtech cannot negotiate with new bidders for Finalto under its agreement with the company, it can perform further due diligence.

It said: “The Consortium hopes that Gopher will use the extension period to now be more forthcoming and provide sufficient information so Playtech and its shareholders can properly assess the ability of Gopher to pass the intense regulatory scrutiny it will be subject to, removing considerable uncertainty for shareholders.”