Playtech continued to dominate the industry news headlines this week with the announcement that it has negotiated a strategic relationship with Sportech plc - parent group of the The New Football Pools in the UK .
The agreement will see Playtech providing e-gaming solutions to Sportech, and subscribing for 19,881,020 ordinary shares of 50p each in Sportech, which will represent 9.99% of the enlarged issued share capital of Sportech in an investment worth some £10 million. The agreed share price represents a discount of 10.71% on Sportech's closing price at the beginning of the week.
This proposed investment is part of the £29.2 million capital needed by Sportech to fund its acquisition of Scientific Games Racing ('SGR'), the US-based pari-mutuel and venue management business division of Scientific Games Corporation, for up to $83 million.
The Sportech - SGR deal will open doors for Playtech to supply e-gaming products to both companies in addition to its earlier collaborative agreements with Scientific Games announced this week.
The combined player bases of the gambling companies are reported to be of considerable proportions in a variety of geographical locations. There is provision in the agreement for the companies to combine on future projects.
Commenting on the Sportech agreement, Playtech chief executive officer Mor Weizer said: "This is a further significant alliance for Playtech in the growing international regulated gaming arena. Through its acquisition of SGR, Sportech has strengthened its already leading position in regulated pari-mutuel markets by adding horseracing to football - two of the most popular gaming sports in the world. We share many of Sportech's goals in growing our business in regulated markets and look forward to helping the company fulfill its great potential."
Weizer revealed that Scientific Games Corporation, Playtech's new joint venture partner, is taking a 19.99% stake in the enlarged Sportech group, which further cements relationships between the companies "in this impressive international business."
In terms of the agreement with Sportech, Playtech is entitled to nominate one non-executive director to the Board of Sportech.
The Sportech deal is interesting in and of itself, because the football pools company is buying the racing and management subsidiary of Scientific Games, which recently signed the major Sciplay collaborative agreement with Playtech plc. The cost of this acquisition is €58.9 million, payable in shares and cash.
Sportech's goal in closing the deal is to expand its pari mutuel football betting operations into the horseracing sector, particularly in the lucrative continental North American region in addition to European and Scandinavian markets.
Sportech already has a JV in the Indian market through its agreements with the Indian company Playwin
The £10 million which Playtech is to put up to acquire a 10% stake in Sportech is complemented by another 20% of Sportech stock which SGR seller and Playtech partner Scientific Games has agreed to buy, thus providing Sportech with the wherewithal to go ahead with the SGR transaction.
The SGR sale requires Sportech to put an initial $65million on the table, followed by a further $10 million by end September 2013 along with payments of up to $8 million conditional on SGR meeting agreed performance targets over the next three years.
SGR management will be positioned on the Sportech, chief exec Ian Penrose said this week.
Source: InfoPowa News