With the Playtech shareholder vote on the original Barinboim Group led offer to buy Finalto and Markets.com just a week away on July 15, a war of words (or more precisely, press releases) has erupted between the Barinboim Group and the new “hostile” bidder, TT Bond Partners.

The original offer for Playtech’s financials division was made by Israeli businessman Zvika Barinboim with backing from financial institutions Leumi and Menora and was formally agreed in May, at an all-cash value of $210 million (although Playtech was kicking back $109 million in cash with the acquired businesses). Last week, an investment vehicle called Gopher Investments announced a competing $250 million all-cash offer for Finalto/Markets.com. Gopher is a Hong Kong based 4.97% shareholder of Playtech, run by Jonathan Bond’s TT Bond Partners investment fund. TT Bond has other investments in the trading space such as Xen Financial and KTrade, Pakistan’s leading retail stock trading app.

And now, both sides are trying to put pressure on the other and swing the minds (and votes) of Playtech shareholders who may ultimately decide which side wins. While Playtech itself has remained silent since issuing a press release the day that the competing TT Bond Partners offer was made, each of Barinboim and TT Bond have issued new press releases (see full text below of each) making their cases directly to both the Playtech Board and its shareholders.

Not surprisingly, TT Bond is urging the Playtech Board to cancel the planned shareholder vote next week and to engage more closely with it towards closing a deal which would provide more value to Playtech. The firm also clarified that it has already “allocated and ring-fenced cash funds” necessary to pay the $250 million price offered.

The Barinboim Group wrote a longer letter, pointing out that the competing TT Bond offer had a number of hidden risks of completion, such as regulatory approvals needed for the buyer (Finalto and Markets.com are licensed in several different jurisdictions). Barinboim also claimed that a prolonged process with TT Bond might be harmful and unstabilizing to the Finalto and Markets.com businesses. And, that there’s an $8.8 million “breakup fee” to be paid by Playtech to Barinboim if a different buyer is ultimately chosen.

The full text of the press releases issued follow:

Gopher Investments Responds to Playtech’s Statement Regarding Gopher’s USD 250 Million Offer for Finalto

HONG KONG — Gopher Investments (“Gopher”), a 4.97% shareholder in Playtech plc (“Playtech”), today issues the following release to clarify certain statements made in Playtech’s announcement (the “Announcement”) on 2 July 2021 that Gopher believes do not fairly reflect the offer letter Gopher presented to the Playtech Board on 29 June 2021.

Financing

As mentioned in Gopher’s letter on 29 June 2021, it has already allocated and ring-fenced cash funds of USD 250 million available for immediate drawdown.

Negotiation of key terms

Gopher notes that it has reviewed the sale and purchase agreement in place for the Consortium’s offer and envisages entering into an agreement on materially equivalent terms. As such, it believes transaction documentation can be entered into very quickly, and it does not anticipate any need for negotiation of key terms or commercial discussions on the transaction documents.

Regulatory approvals

Gopher has already conducted a preliminary assessment of necessary consents and is confident that it would receive approval in each jurisdiction in a timely and efficient manner in each case.

As the Board noted in their Announcement, the Consortium’s offer remains subject to shareholder approval at the General Meeting and approval of regulatory authorities. There can, therefore, be no certainty that the Consortium’s offer will proceed to completion.

General Meeting and next steps

Gopher urges the Board to adjourn the General Meeting, due to take place on 15 July 2021, and engage in discussions with Gopher to proceed towards a recommended transaction that delivers materially better value to Playtech’s shareholders. An adjournment of the General Meeting for a short period of time does not preclude the Board from proceeding with the Consortium’s offer and provides both the Board and shareholders with optionality.

Should the General Meeting proceed, Gopher urges shareholders to VOTE AGAINST the Consortium’s offer, which is in line with ISS’s voting recommendation, updated on 5 July 2021.

About Gopher Investments and TT 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.

The Consortium Urges Investors to Vote in Favour of Its Binding Agreement for Finalto at the Playtech General Meeting on 15 July 2021

The Consortium Outlines the Considerable Unappreciated Risks If the Transaction Is Not Approved

TEL AVIV, Israel–Finalto S.P.V. Ltd, the consortium led by Barinboim Group and backed by Leumi Partners Limited and Menora Mivtachim Group, together with key members of the Finalto Business’ management team (together the “Consortium”), responds to the announcement by another party of non-binding interest in Playtech plc’s (“Playtech”) financial trading division, Finalto Group (“Finalto”).

The Consortium wants to provide an update on the risks that Playtech shareholders face in not voting for the Consortium’s binding agreement for Finalto (the “Binding Agreement”) and provide reassurance on the certainty and fair value of the Consortium’s offer. After a lengthy bidding process, the Consortium was selected by Playtech on the value of its bid and also the certainty it provided that the Binding Agreement would complete and pass the stringent regulatory approvals.

The Consortium’s Binding Agreement delivers considerable value and certainty of completing this complex transaction

As announced on 26th May 2021, Playtech agreed to sell Finalto to the Consortium, thereby concluding a lengthy, complicated, regulatory-driven and in-depth sale process which began in 2019.

• In Playtech’s own words, this has been an “elongated and thorough process” and the Consortium was selected taking into account not just the price, but also its “ability to complete the transaction (particularly in light of the Finalto Business’ regulated status in multiple global jurisdictions) and the potential to provide a “clean break” for Playtech.”
• The complexity of this transaction should not be underestimated. To provide an example, the Consortium was required to complete extensive regulatory and KYC requirements before it was even eligible to undergo the main regulatory approval checks, all of which took several months to complete, even for a blue-chip consortium such as this one.
• The level of scrutiny that each member of the Consortium underwent in this transaction was substantially higher than normal. In fact, before being allowed to participate in the sale process, each prospective buyer was subject to a multi-factor review which ranged from regulatory clearance to assurances over proof and source of funds, all to ensure a high certainty that the transaction would close.
• Once the Consortium was approved to negotiate the sale and purchase of Finalto with Playtech, it was also made clear to the Consortium that Playtech would only agree to a very limited set of representations and warranties, which again was highly unusual for a transaction of this size and level of complexity. The Consortium agreed, and what followed was a signed Sale and Purchase Agreement (“SPA”) for Finalto.

Not voting for the Consortium’s Binding Agreement risks destabilising Finalto and its performance

• Contrary to what was implied in Gopher Investments’ (“Gopher”) statement, shareholders should understand that due to certain binding terms of the SPA, Playtech is unable to engage with any alternative bidders straight away, even if the shareholders vote against the Consortium’s bid. Moreover, any subsequent sale process will take many months to conclude, during which time Finalto will be – yet again – subject to considerable uncertainty. By the Consortium’s conservative estimation, another bidding process will not be concluded until late 2022 at the earliest.
• Additionally, under the terms of the SPA, should the SPA be terminated in the event that shareholders of Playtech do not approve the Consortium’s Binding Agreement, Playtech will be required to pay the Consortium a consideration of $8.8m in the event that a sale transaction is entered into with a third party within the 12 months after termination of the SPA at a value in excess of $200m.
• It seems quite certain that another lengthy sale process will likely have a highly destabilising and damaging impact on the Finalto business and its workforce, which has already been subject to very aggressive market speculation and whose performance is already under considerable pressure due to factors beyond Finalto’s control such as an uncertain trading environment, the impact of the global pandemic, the ever-changing regulatory nature of the industry and the drawn out sale process since 2019, which has taken up extensive management time already.

Questionable lack of transparency from bidding party undermines certainty of its non-binding indicative offer

The non-binding indicative offer from Gopher presents considerable uncertainty for the Playtech shareholders. Little if anything is known about Gopher, the source of its funds and its ultimate controlling party. What Gopher has purportedly shared about itself is:

• It was registered in the Cayman Islands just days ago.
• Gopher is being advised by TT Bond Partners (“TTB”) and its Hong Kong regulated affiliate, TTB Partners Limited, all of which are registered under the very same address in Hong Kong.
• The little that is known about TTB is that it specializes in, and markets itself as, an investment advisor principally focused on linking Chinese investors with foreign deals. Any acquisition by an entity controlled out of China is likely to raise material regulatory concerns and will be subject to very close scrutiny.
• Gopher has recently acquired just shy of 5% of Playtech plc’s shares, the threshold requiring Gopher to disclose extensive information about itself to regulators.
• To date, no information has been made available as to the identity(s) of Gopher’s ultimate beneficial ownership, those who control Gopher, or Gopher’s source of funds.
• It should also be noted that given the sale process was public and has been going on for months, the timing of Gopher’s approach raises suspicion about their intentions. Gopher could have participated in the process when it was live.

THE CONSORTIUM URGES INVESTORS TO VOTE IN FAVOUR OF ITS BINDING AGREEMENT TO ACQUIRE FINALTO AT THE PLAYTECH GENERAL MEETING ON 15 JULY 2021

The Consortium seeks to stress to the Playtech shareholders that the Binding Agreement, which was unanimously supported by Playtech’s board of directors, represents considerable value for Playtech shareholders. Furthermore:

• The Binding Agreement provides Playtech shareholders with near term certainty of completion following a lengthy and arduous sale process.
• There is no certainty that the Consortium would be prepared to proceed with any acquisition should its Binding Agreement not be approved at the General Meeting on 15th July 2021.
• Voting in favour of the Consortium’s Binding Agreement ensures Playtech’s receipt of the considerable Binding Agreement proceeds in the near future, thereby equipping Playtech with additional resources for reinvestment in its core gambling business, and likewise ending a lengthy, costly and distracting sale process.
• Voting in favour of the Consortium’s Binding Agreement removes the considerable risk, delay and additional costs associated with yet another sale process. In fact, the Consortium has already submitted mandatory change of control applications in multiple jurisdictions where Finalto operates to expedite the closing of the Binding Agreement.
• From the outset of the transaction, the Consortium’s Binding Agreement was and remains fully financed with immediately available proceeds.
• The Consortium is made up of three blue chip multinational organisations, namely, the Barinboim Group, an established investment firm that has a track record of acquiring and growing successful global media companies, Leumi Partners Limited, the merchant and investment banking arm of Bank Leumi (TASE: LUMI), one of the two largest banking groups in Israel, and Menora Mivtachim Group, an Israeli insurance and finance group.

Shareholders have a simple decision at the General Meeting on 15th July 2021:

VOTE IN FAVOUR OF THE CONSORTIUM’S FULLY FUNDED AND BOARD-APPROVED BINDING AGREEMENT – REVIEWED BY PLAYTECH’S FINANCIAL ADVISER AND RECOMMENDED BY PLAYTECH – PROVIDING CONSIDERABLE VALUE, NEAR TERM COMPLETION AND CERTAINTY FOR SHAREHOLDERS AND THE PLAYTECH BUSINESS.

OR risk being left in a predicament where there is no firm bid for Finalto and only speculative interest from an unknown entity and no certainty that any transaction will be completed in 2022, with all the costs, delay, uncertainty, and destabilisation for Playtech, the Finalto Business and Playtech shareholders.

About the Consortium

The Consortium is a company incorporated in Israel, established for the purpose of acquiring the Finalto Business. The Consortium is being funded by a group consisting of Barinboim Group, Leumi Partners Limited and Menora Mivtachim Group and by senior secured debt financing from The Phoenix Insurance Company Limited and certain of its affiliates. The Consortium will be supported by key members of the Finalto Business’ management team that will transfer with the Finalto Business, including Ron Hoffman (Chief Executive Officer of the Finalto Business) and Liron Greenbaum (Chief Operations Officer of the Finalto Business).

Barinboim Group is a private equity and venture capital firm based in Tel Aviv. Barinboim Group invests in companies operating in the media sectors.

Leumi Partners Limited is the merchant and investment banking arm of Bank Leumi (TASE: LUMI), one of the two largest banking groups in Israel. Leumi Partners Limited is based in Tel Aviv and offers direct equity investment in sectors such as technology media and telecom, consumer & retail, and healthcare. Leumi Partners Limited’s line of business includes conducting investments and providing services such as underwriting, financial analysis and research, strategic advice, mergers & acquisitions, and raising equity and debt.

Menora Mivtachim Group is one of Israel’s five largest insurance & finance groups. The group specializes in asset management, manages the largest pension fund in Israel – and is the largest General Insurer in Israel and the market leader in Motor Insurance sector. The group operates through its subsidiaries, in all sectors of Life Insurance, Long/Mid/Short -Term Savings, General Insurance and Health Insurance. In addition, the group is active in the capital markets and finance sectors, including, Financial Portfolio Management, Underwriting and worldwide real estate investments.