Playtech reports acquisition of 5.83% of CFH minority shares in 2017
After Playtech acquired 70% of the CFH shares in November 2016, it reports the acquisition of 5.83% of CFH minority shares in 2017.
When Playtech PLC (LON:PTEC) announced the acquisition of 70% of the shares of Consolidated Financial Holdings A/S (CFH) back in November 2016, the deal attracted the industry attention with its pretty complex structure. Today, Playtech posted its results for the year to December 31, 2017, with our focus being on any details about the CFH deal and how it has impacted the metrics.
Let’s recall that, as per previous and the latest reports, Playtech paid total cash consideration of €38.6 million ($41.0 million) for CFH. It also paid €0.3 million ($0.3 million) as additional working capital adjustment in the beginning of 2017.
Playtech has a call option to purchase the remaining 30% of CFH at a valuation of 6 times 2018 EBITDA capped at a total consideration of $76.6 million less the initial consideration. The founder and CEO of CFH have certain put options over his 30% holding at the same valuation.
As per today’s report, in 2017, Playtech acquired 5.83% of minority shares for a total consideration of €3.07 million. Accordingly, the proportional part of the redemption liability and the put/call option capital reserve of a total €3.3 million was removed. The fair value as of December 31, 2017 of the put/call option to purchase/sale the remaining 24.17% shares was €22.4 million.
There is still no clarity on whether the acquisition figure will reach the $120 million, as was touted in the first announcements concerning the Playtech/CFH deal. FinanceFeeds has noted in its analysis that the structure of the deal is way more important to consider than the numbers themselves.
In terms of metrics, Playtech reported that 2017 revenue in the Financials division was €84.9 million, up 29% versus 2016. When excluding the revenue generated by CFH and Alpha, acquired in November 2016 and October 2017 respectively, revenue decreased 3% to €61.7 million.
Cost of operations in the Financials division increased by €7.7 million in 2017. The numbers for 2017, however, include the full year of operational costs for CFH (2016 included only one month) and three months of operational costs for Alpha. Excluding acquisitions, operational costs in the Financials division decreased by €8.3 million, which is reflective of cost optimisation efforts undertaken during 2016.
