Online gaming software supplier Playtech has announced its entry into the social gaming space, agreeing to buy a number of assets and businesses from 48% shareholder and founder Teddy Sagi for €95m.
The world’s largest supplier of online casino games to sites such as Bet365 and William Hill announced this morning that it had entered into a “non-binding” Memorandum of Understanding (MoU) to acquire cross platform-supply capabilities for poker, casino, rummy and bingo across social networks, including the capability for players to purchase virtual currency such as Facebook credits. The acquisition also includes a 20% stake in a “fast-growing B2C social gaming operation” already using these products, as well as outright ownership of other real-money gaming assets, including mobile poker and casino products. Playtech founder Sagi (pictured) whose net worth was estimated at US$1.2bn by Forbes last year, will retain an 80% share and a “perpetual royalty-free” use of the B2C assets.
London AIM-listed Playtech said after that following completion of the intended transaction, subject to final shareholder approval, it “would be uniquely positioned as a leading B2B provider.” The company did not however provide any details of the brands or the profitability of the B2C products in which Playtech has invested €95m to form the basis of its offering in what is an as-yet-unproven market for online gambling companies.
The provider also announced this morning that it had entered into two other MoUs with Sagi, the first to buy or annually lease an office building in London that is currently occupied by Playtech’s GTS subsidiary from a company in which Playtech’s major shareholder is “beneficially interested”, for the respective sums of £10.5m or £0.75m. The software supplier, which owns the world’s largest poker network, iPoker, has also agreed to appoint 49% shareholder Sagi as as advisor ahead of the intended listing on the main list of the London Stock Exchange for a nominal fee of €1 a year.
Playtech, which also operates a thriving bingo network for sites including Mecca, William Hill, Ladbrokes, Virgin, Sky, Bet365, Paddy Power and Crown, also brought forward payment for its earlier purchase of affiliate business PT Turnkey Services Limited from Sagi. Instead of paying the outstanding €80m it was due to pay for the business to the end of 2013, it will pay 5.2% less by paying €76m immediately, to be funded from the Group’s existing debt facilities. Playtech said it believed the “transaction is prudent and makes economic sense”, declaring that PTTS’s performance since its acquisition last July for an initial €140m has been “very strong”, increasing the likelihood of Playtech having to pay the additional consideration of €140m to Sagi, meaning it could eventually pay up to €280m for the business.
Playtech paying the full amount on the PTTS acquisition plus today’s deals for the social gaming assets and the office building going through would mean Sagi has made in the region of £465m from selling businesses he owns back to Playtech since the company listed on London’s AIM market in March 2006. The software business spent US$250m (c£144.5m) in 2008 on acquiring businesses from Sagi (Six-Digits Trading and Uniplay) that it then transferred to William Hill for a 29% share in the Wiliam Hill Online joint venture.
