Playtech Sinks as Former F1 Boss Jordan Pulls Possible Offer

(Bloomberg) --

Playtech Plc shares plummeted after former Formula One team head Eddie Jordan withdrew from a possible offer for the U.K. gambling company, sending them below the price offered by a rival suitor.

JKO Play, Jordan's and gambling executive Keith O'Loughlin's acquisition vehicle, made the approach in November, pitting it against Australia's Aristocrat Holdings Ltd and Hong Kong-based Gopher Investments, Playtech's third-biggest shareholder. Gopher no longer intends to make an offer, and JKO's withdrawal Friday leaves Aristocrat as the last remaining bidder.

However, the 15.8% drop in Playtech shares has sent them to 615 pence in early London trading, below Aristocrat's 680 pence per share all-cash offer. Large investors including Paul Suen Cho Hung have also built stakes in Playtech when the shares were trading at more than 700 pence per share.

“If it intends, as is likely, to salvage the acquisition, Aristocrat now faces little alternative other than to upgrade the offer terms to placate an investor group which has increased positions at prices above the offer level,” United First Partners analyst Josh Rosen said in an emailed comment.

The interest around Playtech is part of a global deal frenzy in the gambling market, that's seen Flutter Entertainment Plc and Entain Plc involved in substantial transactions. The activity was kicked off by a 2018 U.S. Supreme Court ruling striking down a law that barred commercial sports betting in most states.

In a statement Friday, Aristocrat said it was committed to completing its approach for Playtech as soon as possible. The company noted Playtech's statement expressing concerns that “material investors,” who it didn't name, haven't yet disclosed their views on the Aristocrat offer.

“The absence of customary levels of engagement means that the board is approaching the court and general meetings without a clear understanding of whether these shareholders are supportive of the Aristocrat offer,” Playtech said in the statement. It recommended shareholders approve the offer when they give their verdict in a vote on Feb. 2.

Jordan pulled back on concerns that a group of Asian investors who had built stakes in the company could block the deal, the Financial Times reported Thursday, citing sources it did not name. A spokesperson for Playtech declined to comment beyond the statement.

JKO declined to comment beyond its stock market statement.

JKO had a deadline of Jan 26. to either announce a firm intention to make an offer for Playtech or that it doesn't intend to make one. Its departure from the Playtech activity hasn't knocked Jordan's interest in the sector.

“We continue to evaluate a number of opportunities in the gaming and associated technology sectors, where we see exciting growth prospects in a number of international markets,” he said in an e-mailed statement.