Playtech Looks Set to Embark On a Spending Spree
Gambling software development giant Playtech could be set to embark on a spending spree after it revealed it was in active discussions over a number of possible acquisitions following a report that the company's annual revenues increased by 38 percent for the full year of 2015.
Playtech, owners of the iPoker Network, saw revenues rise to €630.1 million in 2015 from €457.0 million in 2014. Its Earnings Before Interest, Taxes, Depreciations and Amortization (EBITDA), a figure used by many companies to reflect financial performance, increased 22 percent to €251.9 million.
Playtech Financial Highlights
| 2015 | 2014 | Change | |
|---|---|---|---|
| Revenues | €630.1M | €457.0M | +38% |
| Adjusted EBITDA | €251.9M | €207.1M | +22% |
| Adjusted Net Profit | €205.9M | €190.8M | +8% |
| Reported Net Profit | €135.8M | €140.3M | -3% |
| Adjusted diluted Earnings Per Share | €0.675 | €0.656 | +3% |
| Total dividend per share | €0.285 | €0.264 | +8% |
The company's gaming division continues to perform strongly with double-digit growth when excluding acquisitions, the costly impact of the UK Point of Consumption Tax, white-label and currency exchange rate fluctuations. Playtech revealed that revenues from regulated countries are growing faster than any of its other markets and now account for 41 percent of its revenues, up from 36 percent in 2014.
Another area of the Playtech portfolio that continues to grow is its financial division. This is a relatively new venture for the gaming giant, which contributed $66.5 million in revenues after acquisition costs were taken into consideration. It is the financial sector that Playtech has been attempting to gain a foothold in.
During 2015, Playtech acquired TradeFX, a foreign exchange and Contract for Difference (CFD) broker, for $224 million (€208 million), but withdrew from the proposed acquisitions of both Plus500 and Ava Trade, something Alan Jackson, Chairman of Playtech, called "disappointing."
Playtech To Expand Its Gaming Division
In his chairman's statement to investors, Jackson revealed that the company has "a very strong balance sheet with significant cash balances." It was reported Playtech as cash reserves of some €857.9 million.
Jackson continued, "Playtech has always been highly disciplined when acquiring businesses and capabilities to ensure that they meet stringent criteria. We are currently in live discussions on a number of potential acquisitions in the Gaming division."
Playtech, once linked with a possible takeover of bwin.party, are being linked with a bid for OpenBet, a sports-betting software provider that is owned by Vitruvian partner, a private equity firm. OpenBet's clients include Ladbrokes, William Hill, Paddy Power, Betfair, and Sky Betting and Gaming, all of whom are companies that Playtech already supplies with either casino or poker products, or both in some cases.
It is thought OpenBet would cost Playtech in the region of £250-£300 million and is thought an acquisition could spark competition questions due to the contracts it already has in place with the aforementioned UK bookmakers.
There are also rumours circulating about a possible takeover bid for Amaya Gaming, owner of PokerStars and Full Tilt, which itself is the subject of a $2 billion "take-private" bid from its chief executive David Baazov.
One major stumbling block in any deal involving Amaya and Playtech would be the fact Playtech's founder and majority shareholder, Teddy Sagi, was jailed in the 1990s for stock fraud, something that could concern U.S gaming regulators, especially in states yet to regulate online poker such as California.
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