Playtech’s Controversial Future Acquisitions Into Social Gaming

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Estonia based Playtech this week has signed a non-binding memorandum of understanding to buy €95 million worth of assets and businesses for social gaming from controlling shareholder Teddy Sagi.

The online gaming software provider is planning to invest in several acquisitions for its future into the social gaming market as news surfaced this past Tuesday. The MoU or should we say the formal alternative to a “gentleman’s agreement” was signed by Playtech to buy assets including social gaming products where people playing interactive games online can buy virtual currency, such as Facebook credits, to use as part of the game.

The recent decision on the software company’s part is raising controversy as news also surfaced that Playtech signed an agreement to buy or rent a new office worth ₤10.5 million from Gaming Technology Solutions Ltd., in which Sagi is a shareholder.

“Where concerns will be raised is that once again Playtech is acquiring assets from its founder and largest shareholder,” Simon McGrotty, analyst at Davy Research, wrote in a note to clients.

“Ninety five million euros is a significant investment, especially in an area that is relatively unproven, there is no mention of the current profitability of the assets being acquired in this morning’s announcement,” McGrotty added.

Playtech plans to acquire B2B (business-to-business) real money gaming and B2B social media assets and businesses and it will acquire 20% in a B2C (business-to-customer) venture from companies in which Sagi is a shareholder.

The company said, “Playtech has been monitoring social gaming activity operated by various companies through social networks and mobile platforms and has been analyzing a number of ways to penetrate the social gaming arena. By completing the intended transaction, Playtech would gain access to a broad range of social gaming platforms and products and believes it would be uniquely positioned as a leading B2B provider with the ability to supply cross platform capabilities for a full suite of products including social casino, poker, bingo and rummy.”

In December 2011, it raised ₤100 million in its second secondary offering, with most of the money coming from Sagi. Playtech has €140 million in cash, which means it has no problem financing the acquisition, however, Playtech’s share price fell 3.8% today to ₤3.37, giving a market cap of ₤1.01 billion.

About Playtech
Playtech is the world’s largest publicly-traded online gaming software supplier, Playtech offers cutting-edge, value-added solutions to the industry’s leading operators.

About Gaming Technology Solutions
Gaming Technology Solutions Limited develops and supplies cross channel gaming software solutions for online gaming operations. It offers GTS Enhanced Gaming Engine (EdGE), a cross channel content delivery platform that offers access to various games, such as sports, casino, bingo, puzzle, and soft games created by developers.

Reported by Maggie B.

 

 

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