LONDON, UK: Playtech plc has entered into an agreement for the sale of its financial trading division (Finalto) to a consortium led by Barinboim Group and backed by Leumi Partners Limited and Menora Mivtachim Insurance Limited, together with key members of the Finalto Business’ management team.
Finalto is a specialist in B2C and B2B multi-channel trading software and services.
The cash offer from the consortium is up to US$210 million, comprising an initial US$185 million of which US$15 million is deferred for up to two years from completion of the transaction, together with a further US$25 million contingent on certain cash flow or other criteria being met by the business carried on by the Finalto group.
The Purchaser is a newly formed company incorporated in Israel, established for the purpose of acquiring the Finalto Business. The Purchaser is being funded by a consortium consisting of Barinboim Group, Leumi Partners Limited and Menora Mivtachim Insurance Limited and by senior secured debt financing from The Phoenix Insurance Company Limited and certain of its affiliates.
The Purchaser will be supported by key members of the Finalto Business’ management team that will transfer with the Finalto Business, including Ron Hoffman (Chief Executive Officer of the Finalto Business) and Liron Greenbaum (Chief Operations Officer of the Finalto Business).
Barinboim Group is a private equity and venture capital firm based in Tel Aviv. Barinboim Group invests in companies operating in the media sectors.
Leumi Partners Limited is the merchant and investment banking arm of Bank Leumi (TASE: LUMI), one of the two largest banking groups in Israel. Leumi Partners Limited is based in Tel Aviv and offers direct equity investment in sectors such as technology media and telecom, consumer & retail, and healthcare. Leumi Partners Limited’s line of business includes conducting investments and providing services such as underwriting, financial analysis and research, strategic advice, mergers & acquisitions, and raising equity and debt.
Menora Mivtachim Insurance Limited is an Israeli insurance and finance group headquartered in Tel Aviv. Menora Mivtachim Insurance Limited is active in the capital markets and finance sectors, including mutual funds management, financial portfolio management, underwriting and worldwide real estate investments. Menora Mivtachim Insurance Limited specialises in asset management, and manages the largest pension fund in Israel, New Mivtachim.
The Phoenix Insurance Company Limited is a subsidiary of Phoenix Holdings Ltd (TASE: PHOE), an Israeli insurance company listed on the Tel Aviv Stock Exchange.
Mor Weizer, CEO of Playtech commented: “Playtech has a stated strategy to simplify the Group and today’s announcement is the conclusion of a two year process in which Playtech has explored all routes to maximise value and certainty for shareholders from Finalto.
“The sale also offers a good outcome for all stakeholders in the Finalto Business, providing certainty for colleagues, customers and trading counterparties. The Consortium has a deep understanding of the Finalto Business and the markets in which it operates and we wish our colleagues every future success.
“Looking forwards, Playtech will focus on its technology led offering in B2B and B2C gambling, driven by our online expertise and supported by a strong balance sheet. We have been building momentum in our business, as highlighted by our progress over the last twelve months in key markets such as the US, Latin America, and Europe. The agreements we have signed with new customers in this period further demonstrate our capability as a leading technology provider and show the type of opportunities we intend to convert in the future.”
As Playtech has announced previously, including in its results announcement of 11 March 2021, it is a strategic focus of the Group to simplify its business operations and dispose of non-core assets. Playtech’s strategy is to focus on its core gambling businesses, where it can leverage its market leading technology. As such, it has for some time been evaluating its options in relation to the Finalto Business.
As part of this strategy, the Board appointed UBS in 2019 to run a process to maximise value from a disposal of the business. In light of deteriorating market conditions for Finalto and its financial performance that year, however, the decision was taken to pause the process for a period of time.
In 2020, market conditions for Finalto rebounded significantly and Playtech was again approached by a number of interested parties. The Board recognised the potential to achieve its stated aim of disposing of Finalto from this position of strong performance and re-initiated the process to review offers for the business. Following press speculation, Playtech announced on 27 August 2020 that such a process had begun, which led to a number of further parties expressing interest in Finalto.
Following analysis of expressions of interest, and as announced on 25 January 2021, Playtech entered into exclusive discussions regarding the possible sale of Finalto to the Purchaser, a consortium led by Barinboim Group and backed by Leumi Partners Limited and Menora Mivtachim Insurance Limited, together with key members of the Finalto Business’ management team who will transfer with the Finalto Business. Agreement on the terms of the disposal has now been successfully concluded and the Purchaser has entered into a binding agreement to acquire Finalto on the terms set out in this announcement.
The Board has unanimously concluded that the agreement reached with the Purchaser should be recommended to shareholders and that shareholders vote in favour of the Transaction at the General Meeting.
The Board has, throughout this elongated process, carefully evaluated all proposals which it has received, taking into account the prices which potential purchasers have proposed, the basis on which those prices have been reached, potential purchasers’ knowledge and understanding of the business, particularly in light of its regulated status in multiple global jurisdictions, and the potential to provide a “clean break” for Playtech.
As well as delivering an attractive value for Playtech shareholders, the Board believes the Transaction represents a good outcome for all other stakeholders, including providing a great home and certainty for Finalto colleagues, customers and trading counterparties. The Transaction offers the opportunity to realise an attractive value for the Finalto Business, achieve significant progress in our strategic aim of simplifying the Group, and release significant capital from a non-core asset.
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25 May, 4:35 pm GMT+1 · Disclaimer
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