UK news source Sky News has reported that online gaming tech and financial services firm Playtech plc (LON:PTEC) is working with its legal and financial advisors on a “Plan B” to break up the company, should its planned £2.1 billion sale to Australia’s Aristocrat Leisure Ltd (ASX:ALL) fall through.

Playtech shareholder vote

Playtech shareholders are scheduled to vote on Aristocrat’s 680p-per-share, all-cash bid to buy Playtech a week from today, on February 2. However according to Sky News, Playtech directors are concerned that a group of Far East investors have accumulated about 25% of Playtech’s float, and could vote together to effectively block the sale to try and get more value for the company. That possibility looked more likely last week, when Playtech shares were trading well above Aristocrat’s 680p bid, in the 720p-730p range.

Competing offer withdrew

However when a potentially competing offer for Playtech, led by former Formula 1 owner Eddie Jordan and ex Ladbrokes executive Keith O’Loughlin, decided to back away, Playtech shares dropped more than a quarter of their value, trading as low as 552p earlier this week. PTEC has recovered somewhat to about 630p, so a vote against 680p seems less likely – especially since Playtech shares might drop even further should the Aristocrat deal fail. Playtech was trading at just the 430p level before the Aristocrat deal was first announced in October.

Alternatives being considered

The alternative being considered, according to the Sky News report, is a breakup of Playtech which could see the separate disposals of the company’s various divisions including its core B2B gaming tech operation, and its Italy-based B2C consumer arm, Snaitech. Playtech paid just over USD $1.0 billion for Snaitech in 2018. However division sales would also need to be approved individually by Playtech shareholders to go ahead. The company has already agreed to sell its Financials division companies, Finalto and Markets.com, to Hong Kong based Gopher Investments for $250 million. That deal was already approved by shareholders, and is slated to close in the first half of 2022.

Playtech response

For its part, after the Sky News report ran Playtech issued a brief “Statement re: media speculation”, which interestingly did not deny the story or that it was examining alternatives. The Playtech board statement read:

“Playtech notes recent media speculation on the Company’s future strategy.  The Board of Directors reiterates its recommendation that shareholders vote in favour of the offer from Aristocrat Leisure Limited (“Aristocrat”). Whilst Playtech has made significant strategic and operational progress and is in a strong position for the future, Aristocrat’s proposal provides an attractive opportunity for shareholders to accelerate the delivery of Playtech’s longer-term value.”

We will continue to follow this story as it develops.