Playtech concludes Finalto sale, pays a $9M break fee to Barinboim

abdelaziz Fathi

Playtech’s second-biggest shareholder, Gopher Investments has completed the long-mooted purchase of Finalto financial services division. However, the final price tag of the transaction could be lowered by up to $20 million.

In a regulatory filing with the London stock Exchange, the listed gambling software developer hailed the conclusion of Finalto sale to Gopher, nearly 7 months after shareholder approved the deal for $250 million.

The final consideration for the all-cash takeover is said to be subject to a completion accounts adjustment of up to $25 million in either direction. The exact amount will be determined by Finalto’s financial performance from January 2021 to completion.

“On the basis of the estimated completion statement for the relevant period, the current expectation is that there will be an adjustment resulting in a lowering of the net consideration in the range of US$15 million – US$20 million. This adjustment remains an estimate at this stage and will be finalised post completion in accordance with the actual completion accounts in line with the sale and purchase agreement,” Playtech statement reads.

On top of that, Playtech must pay a $8.9 million break fee to a consortium led by Israel’s Barinboim Group for breaking its agreement. On August 18, Playtech’s general meeting rebuffed a proposed $210 million to sell Finalto to this consortium as shareholders argued the offer undervalues the business.

Gopher Investments, a consortium of Asian and American investors, had then lodged its higher bid for Finalto, rivalling the Barinboim offer. This has forced Playtech’s board to go back and engage with its minority shareholder, which owns a 5% stake in the firm founded by Teddy Sagi, after it had rejected its initial offer.

Following a months-long battle, Playtech’s board recommended unanimously in favour of the acquisition. The FTSE 250-listed group didn’t change its recommendation, particularly as it didn’t receive interest in Finalto from other potential acquiring parties.

Playtech’s trading technology division has become a lucrative target last year as increased market volatility, led by Covid-19 chaos, boosted revenue. However, before that Playtech trimmed its profit guidance due to highly challenging trading conditions and a regulatory crackdown on risky trading products.

Finalto’s business includes TradeTech Alpha, created to deliver a B2B solution, Markets.com, a provider of CFD and FX trading to retail investors, and MarketsX, a dedicated B2C brand for high-net worth clients. Furthermore, it includes CFH Group, which Playtech acquired in 2016 in a $120 million deal.

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