Playtech $2.9B Offer Yanked By Eddie Jordan, Stock Plunges

Shares of gaming technology provider Playtech (LSE:PTEC) plunged 20.67 percent today on volume that was more than triple the daily average. That’s after JKO Play Ltd. withdrew a $2.9 billion takeover offer.

Playtech JKO
Playtech JKO
Businessman Eddie Jordan (l), seen here in 2014 with F1 star Lewis Hamilton. Jordan’s JKO Ltd. dropped a bid for Playtech. (Image: James Moy Photography)

JKO Play is led by former Formula One team owner Eddie Jordan and Keith O’Laughlin, previously an executive at Scientific Games (NASDAQ:SGMS). Various media outlets reported Friday that Jordan abandoned the proposal amid concerns that a group of Asian investors that have become major Playtech investors would oppose the acquisition bid.

Previously, a Hong Kong investment group known as Gopher Investments made an offer for Playtech that was later pulled. It’s not clear if the aforementioned Asian investors have ties to Gopher. But the Financial Times those shareholders now control 27 percent of Playtech equity. That gives them considerable sway over decisions on mergers and acquisition.

JKO will continue to evaluate a number of opportunities in the gaming and associated technology sectors, where we see exciting growth prospects in a number of international markets,” according to a statement issued by the group.

Under UK takeover law, the consortium cannot make another bid for Playtech for another six months.

Aristocrat Offer Still on Table, But…

Last October, Playtech agreed to a $2.8 billion deal with Aristocrat Technologies, one of the world’s largest makers of gaming machines. Playtech’s board is recommending to investors they accept that offer.

The boards of both companies are slated to meet on Feb. 2 to vote on the offer. But the situation isn’t as straight-forward as either party would like, due in part to the aforementioned investors amassing a sizable stake in Playtech. A potential stumbling block is that, prior to Friday’s slide, Playtech stock surged to prices above Aristocrat’s offer. Many of the Asian investors are believed to have purchase the shares at prices higher than where Playtech traded before the bid was revealed.

In a statement out earlier today, the Playtech’s board acknowledges it’s having difficulty initiating talks with “certain investors that have disclosed or taken material positions.” That could be an indication the target isn’t yet clear how the Feb. 2 vote will play out.

Playtecch adds that it “continues to seek engagement with all of its shareholders regarding the Aristocrat offer.”

Aristocrat Quiet for Now

Aristocrat didn’t publicly comment on JKO dropping out of the bidding process, and it appears the Aussie gaming machine giant will proceed with its original offer for Playtech.

Playtech makes software for internet casinos, web-based poker rooms, and online sports wagering. It also provides software for fixed-odds arcade games, online games, and provides services for scratch games.

Those traits make it an alluring takeover target at a time of rapid growth in the iGaming and regulated sports betting industries, particularly in North America. However, it’s not clear if other suitors are waiting in the wings and mulling bids for Playtech.

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