Playtech issues 315m bond offer to power M&A
Supplier to raise additional funds via bonds placing to pursue "acquisitive and organic opportunities"
Playtech this morning announced plans to raise approximately 315m via a bond offering in order to fund an acquisition strategy, despite already sitting on more than 400m in cash reserves.
In a statement released to the market, Playtech said the proceeds of the offering will be used for “pursuing acquisitive and organic opportunities for Playtech in line with its strategy”, adding that it had identified a “number of opportunities ahead that will create significant value to shareholders”.
Playtech has been vocal about its pursuit of a “transformational” acquisition over the course of the past year as it looks to put the proceeds of its sale of its stake in William Hill Online to good use.
And last month CEO Mor Weizer said the firm was confident of making a “next level” acquisition by the end of H1 2015, intimating that it had been in discussions with prospective targets.
The addition of 315m to Playtech’s purchasing power – the firm’s cash and equivalents balance stood at 402.4m as of 30 September 2014 – would indicate that it is eyeing up a major purchase.
Peel Hunt analyst Nick Batram said this morning’s announcement “suggests that there is a fairly sizeable target” lined up.
The bonds are expected to have a stated maturity date of 19 November 2019 and will be convertible into fully paid ordinary shares of the company, with the full offering to represent 10% of Playtech’s issued share capital.
Final terms are to be announced later today and settlement is expect to take place on or around 19 November prior to a full application to trade the bonds on the Frankfurt Stock Exchange within three months of that date.
Playtech’s share price fell around 7% to 627.5p this morning on the back of the announcement and the company’s fortunes has split analysts.
Credit Suisse yesterday downgraded the firm from ‘neutral’ to ‘underperform’ and slashed its target price from 780p to 580p citing management’s focus on M&A which was considered to be “not necessarily aligned with shareholder interests”.
Other brokers have however reiterated buy ratings and Cannacord last week maintained its target price of 840p, indicating a potential upside of almost 30% on its previous close.
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