UK’s Playtech buys Italy’s Snaitech for €846 million
Playtech, a British gambling technology firm, announced that they agreed to buy a majority stake of 70.6 percent in Snaitech, an Italian betting and gaming giant, which is estimated at €846 million.
After the initial acquisition is completed, an obligatory takeover will be required from Playtech for what is left of the Snaitech shares. The overall transaction is expected to be finalized in the fourth quarter, upon obtaining regulatory and shareholder approval.
Playtech boasts of being “the world’s largest online gaming software supplier traded on the London Stock Exchange Main Market,” and on the trade morning they hit the jackpot with their shares going up 8.3 percent at 824.60 pence. At the same time, shares in Snaitech were at EUR2.16, with a 15 percent increase.
Due to its progressive legislation which enables companies to operate freely, Italy is a rather attractive market for gambling and notably the biggest one in Europe. Given the fact that gambling is experiencing a rapid growth in Italy, whereas online gambling is still underdeveloped, unsophisticated and has yet to reach its peak, Playtech has seized this opportunity on the market offering such potential (41% of betting is done online in the UK, compared to only 7% in Italy). One of the challenges will be to operate on a market which is fragmented more than the familiar British one; the top five online operators in the UK have a market share of 87%, whereas in Italy the percentage is somewhat lower at 56%.
2017 was not a good year for Playtech. Its shares dropped more than 20 percent following the market conditions being changed in some parts of Asia (mainly Malaysia, which is one of the biggest Asian markets), so it ended the year below targeted market expectations. It is no surprise that Playtech turned to acquisitions in order to recover from a dissatisfying last year and consequently wanted to turn to gambling markets which are regulated so as to prevent this from happening again.
Snaitech is the leader in the Italian gambling and betting market, and it generated €890 million in revenue and €136 million in EBITDA last year. It has more than 270,000 active players online and an enormous network of more than 1,600 points of sale all over Italy. However, its €413 million share capital is outstripped by its €429 net debt which is, needless to say, a hefty burden and the acquisition by Playtech seems to be what the company was in dire need of in order to stay afloat.
Snaitech will start using Playtech’s technology, which is used all around the world, and Playtech is confident that the potential revenues will be highly satisfying.