This is now getting interesting.

A firm calling itself Gopher Investments has made a $250 million competing offer to buy the Financials division of Playtech plc (LON:PTEC), consisting of the Finalto institutional B2B business and Retail FX broker

FNG had exclusively reported back in January that Playtech had come to an agreement to sell Finalto/ to an Israeli investment group led by Zvika Barenboim with backing from financial institutions Leumi Partners Limited and Menora Mivtachim Insurance. That deal was formally unveiled in late May, with the price being reduced from $200 million to just $101 million for Finalto. (Playtech is calling it a $210 million sale, but it agreed to kick in $109 million in cash with Finalto as part of the deal.)

Jonathan Bond

Gopher Investments is a Hong Kong based investment vehicle which owns a 4.97% stake in Playtech, so it is very familiar with the Finalto and businesses. The company is an affiliate of Hong Kong investment firm TT Bond Partners, run by ex investment bankers Jonathan Bond and Teresa Teague. The company issued a press release (full text follows below) indicating that its offer is all-cash, and advised that Playtech shareholders vote against the agreed-upon sale to the Barenboim group at a Playtech shareholder meeting set for July 15, given their superior offer.

Playtech, in response, issued its own release (also repeated below in full), acknowledging that it received the offer but that its hands are effectively tied, as it is bound by the restrictions agreed in the binding agreement signed with the Barenboim group.

So what happens now?

Well, it looks unlikely that Playtech shareholders will approve an inferior offer, even though the Gopher offer came in late in the process. Playtech shareholders have indeed revolted before.

The full text of both the Gopher offer, and the Playtech response, follow:

Gopher Investments Makes USD 250 Million Offer for Playtech’s Finalto Business

  • Gopher Investments makes USD 250 million all-cash offer for Finalto
  • Represents a premium of up to 47% to the current Board recommended Consortium offer
  • No deferred or contingent component, delivering certainty of full proceeds for Playtech
  • Offer on materially comparable terms and to complete in similar timeframe
  • Gopher urges shareholders to vote against the Consortium’s offer in the forthcoming General Meeting to enable the Board to consummate a deal with Gopher

HONG KONG – Gopher Investments (“Gopher”), a 4.97% shareholder in Playtech plc (“Playtech” or the “Company”) and an affiliated entity of TT Bond Partners (“TTB”), today announces that it has made an indicative offer to the Board of Directors of Playtech to acquire Finalto for USD 250 million in cash (the “Offer”). This represents a 47% premium to the base proposal offered by Finalto’s management team backed by a consortium led by Barinboim Group (the “Consortium”).

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.

Based on Playtech’s most recent public disclosures,1 Gopher’s proposed valuation represents:

  • a 47% premium (USD 80.0 million) to the base proposal from the Consortium;2
  • a 35% premium (USD 65.0 million) to the guaranteed consideration in the Consortium’s proposal;3
  • a 19% premium (USD 40.0 million) to the maximum consideration payable by the Consortium, including full contingent consideration (notwithstanding the challenging targets attached to this contingency as detailed in the circular and further clarified below);4 and
  • a compelling Apr-21 LTM EV/EBITDA multiple of 27.2x.5

Gopher has carried out a detailed review of Finalto from a range of publicly available resources. As such, it is prepared to perform only limited due diligence, anticipated to take no more than 3 weeks, before seeking to enter into a fully binding offer for Finalto on terms that are materially equivalent to those entered into with the Consortium. Gopher does not expect its binding offer to be subject to any conditions beyond the equivalent conditions to which the Consortium’s proposal is subject, namely Class 1 shareholder approval and mandatory regulatory clearances.

Gopher does not dispute the disposal of Finalto as a non-core asset, but it believes that Finalto’s attractive growth prospects are not fairly reflected in the value of the Consortium’s offer that has been recommended by the Board.

TTB has significant experience in evaluating investment opportunities in the technology-driven financial services sector. It is strongly of the opinion that the digital financial services industry will continue to grow exponentially, driven by factors such as the underlying growth of financial assets globally, the low interest rate outlook, the adoption of technology platforms for ease of execution and the rapid expansion of the emerging middle class across growth markets. 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. 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.

Gopher presented its Offer to Monaco’s Board on 29th June 2021 and today received a written response from the Board, in which it stated that it believes that it has limited flexibility to engage with Gopher under the terms of the SPA that it entered into on 26th May with the Consortium which Gopher believes is an unusual constraint to have allowed given the other protections in place.  As such, Gopher urges shareholders to vote against the Consortium offer at the General Meeting on 15th July 2021 which will give the Board the ability to consummate a transaction with Gopher

Gopher considers its Offer to be full and fair, representing appropriate value for the potential of the Finalto business and a clear and material valuation uplift for Playtech shareholders. Gopher reiterates that it is fully funded and is in a position to proceed immediately and expeditiously towards a consensual and recommended transaction.

Rothschild & Co. is acting as Financial Adviser to Gopher Investments on the Offer for Finalto.

White & Case LLP is acting as legal advisor to Gopher Investments on the Offer for Finalto.

1. Source: Class 1 Circular dated 24 June 2021.
2. Consideration from the Consortium of USD 170 million payable in cash on completion.
3. Guaranteed consideration from the Consortium of USD 185 million.
4. Contingent consideration of USD 25 million appears to be subject to achieving challenging targets there is no certainty of realising (TTB notes from its review of the SPA that the previously undisclosed cashflow target is set at a cumulative net inflow of £85m over a 30 month period).
5. Adjusted EBITDA for the twelve month period ended 30 April 2021 of USD 9.2 million.

About Gopher Investments and TTB Bond Partners

Gopher is an investment vehicle backed by investors with experience in gaming and financials, and is an affiliate of TT Bond Partners (“TTB”). TTB, through its Hong Kong regulated entity, TTB Partners Limited, which is advising Gopher on this transaction, is an investment and advisory firm based in Hong Kong, whose founders and professionals have over 30 years’ experience in the financial services industry investing and advising on over $250 billion of transactions in the US, Europe, and Asia.

TTB has significant experience in investing in assets in the technology-driven financial services sector. Recent investments include: Xen Financial, a next-generation investment platform providing fractionalised access to private markets; KASB, a stock brokerage in Pakistan, and creator of KTrade, Pakistan’s leading retail stock trading app; Finhabits, a US-based leading bilingual money app designed for Latinos’ financial success; Selfin, a digital microlending platform focused on financial inclusion of microenterprises in India; Aspen Digital, an innovative technology-driven platform that empowers asset and wealth managers to offer digital asset products with confidence, driving mass adoption of digital assets and blockchain technologies; Coherent, a Hong Kong based insurtech company building digital platforms for insurers; and M7 Real Estate, a UK and EU based real estate asset manager.

N.M. Rothschild and Sons Limited (“Rothschild & Co”), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Gopher Investments and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Gopher Investments for providing the protections afforded to clients of Rothschild & Co nor for providing advice in connection with any matter referred to herein or the other matters referred to herein.

Response to indicative conditional proposal from TT Bond Partners to acquire financial trading division (“Finalto”)

Playtech plc (“Playtech” or the “Company”) acknowledges the announcement made today by Gopher Investments (“Gopher”) and confirms that the Company received on 29 June 2021 an indicative non-binding conditional offer from Gopher to acquire Finalto for US$250 million.

As announced on 26 May 2021, Playtech successfully entered into a binding agreement (the “SPA”) for the sale of Finalto to a consortium buyer for cash proceeds of up to US$210 million (the “Consortium Offer”). The sale was the result of an elongated and thorough process, which started in 2019, and included subsequent announcements on 27 August 2020, which led to a number of other parties expressing interest in Finalto, and 25 January 2021, where terms of the Consortium Offer at the time were disclosed.

Both Playtech and the consortium buyer are bound by the restrictions agreed as part of the SPA, which includes not engaging in negotiations with any third party regarding a potential transaction involving the sale of Finalto, as is customary for transactions of this nature, especially where they have been concluded after a long and detailed formal process and which was in the public domain. The timing at which Gopher has chosen to come forward with its indicative proposal makes it very difficult for the Playtech Board to properly assess the proposal, given the restrictions agreed in the SPA. It is unfortunate, in light of the long sale process run to date, that Gopher did not advise Playtech of its interest in acquiring Finalto at any point prior to 29 June 2021.

The Board has, throughout the process which led up to entering into a binding agreement with the consortium buyer, carefully evaluated all proposals which it received, taking into account the prices which potential purchasers proposed, the basis on which those prices have been reached, potential purchasers’ knowledge and understanding of the business and ability to complete the transaction (particularly in light of the Finalto business’ regulated status in multiple global jurisdictions).

As detailed in the circular published on 24 June 2021, the Consortium Offer offers the opportunity to realise an attractive value for the Finalto business, achieve significant progress in our strategic aim of simplifying the Playtech Group and release significant capital from a non-core asset. Completion of the Consortium Offer is conditional only on (i) the approval of the disposal by shareholders at the general meeting to be held on 15 July 2021 (the “General Meeting”) and (ii) the approval of certain regulatory authorities in respect of the change of control.

The indicative proposal from Gopher is non-binding and is subject to a number of conditions, including due diligence, financing, negotiation of key terms, preparation of transaction documentation and receipt of regulatory approvals. Therefore, there can be no certainty that the transaction proposed by Gopher would proceed to signing or completion.

As included in the 26 May 2021 announcement, for the first four months of the 2021 financial year Finalto has made an adjusted EBITDA loss of US$0.4 million in aggregate.