Playtech to sell financial trading division Finalto for $210m

Playtech has struck a deal to sell off its financial trading division Finalto for $210m (£148m) to a consortium led by Tel Aviv-based private equity and venture capital firm Barinboim Group. The buying consortium is also backed by Leumi Partners Limited and Menora Mivtachim Insurance Limited, alongside key members of the Finalto management team. The $210m cash offer from the group of investors comprises an initial sum of $185m, of which $15m is deferred for up to two years from completion of the transaction. A further $25m will be added contingent on certain cashflow and financial conditions being met by the business once under the new management of the acquiring consortium. Playtech said the disposal of Finalto was in line with its strategy to simplify operations as it can now focus solely on its technology-led offering as a “pure play” business across the B2B and B2C gambling sectors. The London-listed supplier said the sale was the conclusion of an extensive process, having explored all routes to maximise value and certainty for shareholders. It was unanimously approved by the Playtech board. Finalto had become an attractive asset amid the Covid-19 pandemic and was one of the group’s best-performing segments as traders took advantage of stock market volatility during lockdown. The transaction price represents 24 x full-year 2019 adjusted EBITDA, being the last full year prior to 2020, which was impacted by one-off Covid-19 benefit. As of 31 December, Playtech held $139m of cash relating to Finalto’s regulatory and operating requirements on its balance sheet. On completion of the sale, which is expected to close in Q4 2021, $109m of this operating expense is expected to be transferred with Finalto, leaving Playtech with net cash proceeds of $61m. Playtech CEO Mor Weizer said: “Playtech has a stated strategy to simplify the group and today’s announcement is the conclusion of a two-year process in which Playtech has explored all routes to maximise value and certainty for shareholders from Finalto. “The sale also offers a good outcome for all stakeholders in the Finalto business, providing certainty for colleagues, customers and trading counterparties. “The consortium has a deep understanding of the Finalto business and the markets in which it operates and we wish our colleagues every future success. “Looking forwards, Playtech will focus on its technology-led offering in B2B and B2C gambling, driven by our online expertise and supported by a strong balance sheet,” he added. Peel Hunt analyst Ivor Jones commented: “We regard this as a beneficial strategic simplification of the group. The total potential price agreed is higher than the $200m we had expected, as is the committed portion, $185m of which $15m is deferred by two years. “Completion is expected in Q4 at which point, if trading has stabilised, we would expect Playtech to consider a return of at least some of the proceeds to shareholders.”