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Playtech in talks over potential counterbid

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Gambling software group Playtech is in takeover talks with its second-biggest shareholder, setting up a bidding war with Australian slot machine developer Aristocrat Leisure, which had already tabled a £2.7bn offer.

Gopher Investments, a Hong Kong-based asset manager, contacted Playtech’s board on October 21 seeking “certain due diligence information”, the UK-listed gambling company said in a statement on Monday.

The approach was made just days after Playtech announced it had agreed a £2.7bn takeover by Aristocrat, which is intended to boost the Australian acquirer’s presence in the fast-growing US betting market.

Playtech, which was founded by the Israeli billionaire Teddy Sagi in 1999 and listed in 2006, develops software for online gambling and gaming machines and has operations in three US states. It is in discussions with US partners to launch in Mississippi having last month won a licence to operate in the state.

Analysts estimate that the US betting market is likely to become the world’s largest regulated gambling market after a federal ban on betting outside of Nevada was overturned in 2018.

Shares in Playtech jumped 4 per cent to 734p a share in early morning London trading before falling back. They are still trading ahead of Aristocrat’s 680p-a-share offer, however.

Aristocrat said in a statement on Monday that its “long-term engagement with regulators across key gaming jurisdictions, together with strong financial fundamentals, deep customer relationships and established presence in global gaming markets” meant that it was ready to complete the deal in the second quarter of next year.

It added that its offer would “provide certain value to Playtech shareholders”.

Playtech has had a tumultuous relationship with Gopher, which owns 4.9 per cent of the London-based gambling company, since it bought into the business for about $100m in May.

The asset manager was outspoken in its criticism of the Playtech board during the sale of its financial trading division, Finalto, accusing it of not being transparent in the sale process. Gopher ultimately stepped in to buy the business itself in a $250m deal that is being finalised.

Aristocrat said that its acquisition of Playtech was conditional on the Finalto sale being completed.

Gopher has also voiced concern that Playtech’s long-awaited new chair Brian Mattingley was previously chair of the football betting start-up Football Index, which collapsed into administration in March.

Mattingley was made chair after years of perceived corporate governance failures at Playtech including multiple shareholder revolts over the size of pay package given to its chief executive Mor Weizer.

The company has been subject to multiple campaigns by activist investors including Jason Ader, a serial gambling-industry investor, and Odey Asset Management, the investment vehicle of hedge fund manager Crispin Odey, and has been trading at a far lower value than many of its industry peers.

Sagi floated the business in 2006 and sold his last shares in 2018.

Playtech shareholders accounting for about a fifth of the company’s public stock said that they intended to vote in favour of the Aristocrat takeover at the time the offer was announced.

Playtech said that discussions with Gopher “are at an early stage and ongoing”. Gopher declined to comment.

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