Teddy Sagi's Playtech embroiled in takeover battle

Israeli billionaire Teddy Sagi, the founder of Playtech, declined to comment on the withdrawal of Eddie Jordan's potential bid for the online gambling company he founded back in 1999.

According to Israeli news platform Globes, Sagi had already sold his remaining holdings in Playtech three years ago and ceased to be a party of interest in the company.

The Financial Times had reported last week that former Formula One team boss Eddie Jordan pulled a potential bid for Playtech because of concerns that a group of Asian investors who had recently bought into the company would block the deal.

Jordan’s acquisition vehicle, JKO Play, had been set to propose an offer of 750 per share for Playtech, which provides back-end technology to gambling companies such as Entain. JKO planned to publish a statement on Friday morning announcing its intention to pull out, said three people involved in the process.

Its bid would have put it in competition with Australia’s Aristocrat Leisure, whose offer had been recommended to shareholders by Playtech’s board.

This month, the UK Takeover Panel extended the deadline for JKO to make an offer from January 5 to January 26, after it announced its interest in November.

Aristocrat’s offer at 680p per share is below Playtech’s current share price, which has surged about 72 percent since Aristocrat’s bid was accepted by the board last October because of competing interest from the Hong Kong-based asset manager Gopher Investments and JKO.

Gopher abandoned its bid for the company in November.

Two advisers working on the deal separately said JKO had decided not to go ahead with its offer over concerns that a block of Asian investors, who have been building stakes in Playtech since October and now own about 27 percent of the company, would obstruct any deal that did not meet their perceived value of the company.

“In these circumstances, the economics become tricky for any bidder,” one said.

JKO and Playtech declined to comment.

The Playtech board added on Friday morning that it “continues to seek engagement with all of its shareholders regarding the Aristocrat offer”, but said that due to the lack of engagement from “certain investors that have disclosed or taken material positions” it was unsure whether Aristocrat’s offer would be approved at forthcoming shareholder meetings.

The meetings are scheduled for February 2.

The takeover battle is the latest in the gambling sector where companies are increasingly seeking to consolidate or find greater financial heft in order to deal with tighter regulations, as well as enter fast-growing new markets such as Latin America and the US.

Playtech, which was founded by the Israeli billionaire Teddy Sagi in 1999, owns the right to acquire a large stake in the Mexican gaming company Caliente and has been expanding its US operations, launching two live casino facilities, through which it streams casino games, in Michigan and New Jersey in December.

Aristocrat intends to go ahead with its bid at the current price, which values Playtech at £2.7bn, despite concerns over the potential for the Far Eastern investors to act together and block any deal, a source working on the offer said.