Playtech set for share buy-back
Software provider does not believe recent trading reflects the company's proper value.
Playtech is to perform a buy-back of up to 10% of its shares aimed at protecting long-term investors, as its board believes recent trading does not reflect the company’s “true value”.
The AIM-listed software provider made the announcement this morning following a 12-month period during which its shares fell more than 30%, hitting a low of 286.5p last month.
Playtech said in a statement to the market: “[G]iven the disconnect between the Board’s confidence in the business and the Company’s recent share price performance, Playtech intends to utilise this authority, subject to market conditions, to repurchase up to 10 per cent of its own ordinary shares.”
The software provider also emphasised that it was well-positioned “to pursue potential acquisitions that meet its investment criteria and drive organic growth”, with chairman Roger Withers (pictured) highlighting the “substantial free cash flow” generated by the business. Playtech is understood to be close to completion on its buy of casino games supplier Ash Gaming.
Withers said: “Our recent trading and contract win announcements should not only provide the market with comfort in respect of our existing business but also demonstrate the substantial opportunities that are available to drive future growth.
“We expect that the market will recognise the true value of our business. Should the public markets continue to offer an opportunity for us to purchase shares at what the Company believes are compelling valuations, the Board must retain the ability to utilise a portion of our cash resources for the benefit of all of our long-term shareholders.”
Playtech’s decision comes despite its share price outperforming all of its London-listed egaming peers on a like-for-like basis in recent months, with the exception of Sportingbet. The sector has however been consistently trading at levels well below that of the London FTSE as a whole, due in the main to investors’ view of the high risk profile attached to non-regulated markets. This investor consensus on the sector was reflected in the volatile reaction last month of bwin.party’s share price to news of a potentially restrictive regulatory regime being introduced in its core dot.com market of Germany from 2012.