Playtech delays general meeting to consider Gopher Investments’ Finalto bid | M&A

Playtech has delayed the general meeting in which shareholders were set to vote on a bid to sell financial trading division Finalto.

Shareholders were due to meet on 15 July to consider a bid from a consortium led by Israeli investment business Barinboim Group and backed by Leumi Partners and Menora Mivtachim Insurance. Playtech’s board agreed to this deal in May.

The deal would be worth up to $210m, with an initial up-front payment of $170m, a deferred but guaranteed $15m payment and the remaining $25m paid based on performance.

However, last week, Playtech shareholder Gopher Investments produced a rival $250m all-cash bid.

Gopher then urged the Playtech board to delay the general meeting and enter negotiations with the investment company.

Playtech has now done so, pushing the meeting back two weeks until 29 July, so both the board and shareholders may “consider recent developments”.

However, the Playtech board pointed out that it remains bound by the terms of its agreement with the Barinboim consortium, which states that it may not engage with other parties on the sale of the division. If it does so, Playtech will be required to pay $8.8m as part of a break clause.

However today, Gopher added a $10m break clause of its own to its offer.

Gopher must pay the fee to Playtech if it does not enter into an official sale and purchase agreement on terms “materially equivalent” to the consortium bid within three weeks of the start of the due diligence process. The fee must also be paid by Gopher if the deal fails to receive regulatory approval.

This break clause in the Gopher deal would allow Playtech to consider the offer and cover the financial penalty of backing out of the Barinboim offer. 

“The indicative proposal from Gopher is non-binding and is subject to a number of conditions, therefore there can be no certainty that the transaction proposed by Gopher would proceed to signing or completion,” Playtech said. “The consortium offer has been signed and is binding, but remains subject to shareholder and regulatory approval, and as such there can be no certainty that the consortium offer will proceed to completion.”

The Barinboim consortium welcomed the postponement of the meeting.

“The consortium recognises Playtech’s fiduciary duty to its shareholders and is pleased that Playtech and its shareholders will now have the opportunity to scrutinise the recent indicative non-binding interest for Finalto from Gopher Investments,” it said.

However, the consortium reiterated its argument that serious questions about Gopher and its bid remain, as the business’ ownership and source of funds remain unclear.

“Since Gopher announced its indicative non-binding interest on 2nd July 2021, it has revealed very little information on itself, the source of its funds and its ultimate controlling parties, all of which will be heavily scrutinised by regulators,” it said. “To the best of the consortium’s knowledge, Gopher has failed to properly answer even basic questions on these matters, which should be of great concern.”

It suggested that the investment fund may have ties to China, which may raise “material regulatory concerns”, which would make approval of the deal more difficult.

The Barinboim consortium added that while Playtech may not negotiate with new bidders under the parties’ agreement, it may perform further due diligence about Gopher.

“The Consortium hopes that Gopher will use the extension period to now be more forthcoming and provide sufficient information so Playtech and its shareholders can properly assess the ability of Gopher to pass the intense regulatory scrutiny it will be subject to, removing considerable uncertainty for shareholders,” it said.

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