Finalto bidding war escalates as Playtech shareholders veto original offer

Playtech shareholders have voted to veto a proposed $210m (£152.5m) bid from a consortium led by Tel Aviv-based private equity and venture capital firm Barinboim Group to acquire its Finalto business. At an extraordinary general meeting, shareholders were 68.3% in favour of dismissing the Barinboim-backed bid, with 31.7% of attending shareholders approving the $210m deal. A total of 240,538,731 votes were cast, with 1,896,155 abstentions. As a result of the dismissal, Playtech has agreed to terminate its sale purchase agreement with the consortium, clearing the way for Playtech to begin talks with rival bidder Gopher Investments. “The board’s stated strategy remains to simplify Playtech’s business and to dispose of Finalto for the maximum available proceeds,” Playtech said in a statement. “Playtech understands that by voting against the resolution to dispose of Finalto to the consortium, shareholders have been willing to accept the risk of the SPA terminating. “This thereby enables Playtech to engage with Gopher and to potentially secure better terms for a sale of Finalto,” the supplier added. Despite Playtech’s decision to engage with Gopher Investments, the rival consortium has said it will maintain its bid for the next 30 days, to allow for the re-entering of the sale purchase agreement in the event the Gopher bid fails to be agreed upon. Having received a green light to engage with the online casino supplier over a deal, Gopher Investments said it would now work to complete the  acquisition in an “expedient and transparent” manner. Responding to the veto of its bid, the consortium suggested that Gopher’s interest in Finalto was “not genuine” and that its bid represented the only credible transaction for Playtech. “The consortium firmly believes that the consortium deal, negotiated after an onerous 18-month process led by UBS, involving extensive regulatory, financial and tax diligence, represents the only transaction capable of withstanding regulatory scrutiny and being concluded in the near term without material disruption and damage to the Finalto business,” the consortium said. “The consortium was disappointed that shareholders did not vote in favour of its deal at the General Meeting, however, the consortium does understand the predicament faced by shareholders and certain parties, notably advisory firms Institutional Shareholder Services (ISS) and Glass Lewis, when assessing the situation.” The group added: “This was particularly the case given Gopher’s publications of what the consortium believe to be misleading statements and indeed Playtech was compelled to issue corrections to Gopher’s false information. “With regard to ISS and Glass Lewis, the consortium has been disappointed that despite multiple requests made to meet independently with the advisory firms to avail them of important information, they refused to do so. “The consortium is confident that a deal will not be forthcoming within the three weeks Gopher claims it will take and when this becomes clear, the consortium will welcome the opportunity to engage directly with ISS and Glass Lewis in a constructive manner, which can only benefit Playtech shareholders,” the consortium added. Finalto became 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. A $210m deal to sell the business to the consortium had been agreed by Playtech in May but required shareholders to ratify the sale. Gopher Investments first went public with its $250m bid for Finalto in July, triggering a period of intense activity among Playtech shareholders. At the time, Playtech said it was bound by restrictions due to the advanced stage of sale discussions, suggesting Gopher should have declared its interest earlier in June. In response, the Hong Kong-based private equity firm urged Playtech to postpone the general meeting scheduled for 15 July and instead negotiate with the fund over its superior bid. It advised Playtech shareholders to vote against the deal, with proxy adviser ISS and Glass Lewis among those to reverse their initial decision to back the consortium bid. Gopher also included a $10m sweetener in the form of a ‘break fee’ to encourage Playtech to favour its bid over its rival.