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Screenshot of a breaking news alert e-mail from Q2 2017
Online gaming and financial trading giant Playtech PLC (LON:PTEC) has announced that its largest shareholder, Teddy Sagi, will be selling close to one-third of his holdings in the company.
At Playtech’s current share price of £9.19, the expected gross proceeds of the sale will be about £296 million (USD $370 million), although secondary share offerings such as these are often done at below market price (more on that below).
Playtech’s main business is online gaming systems and technology, although the company is also a major player in the online financial trading business via its retail forex Markets.com unit. The company is now entering the institutional FX liquidity and platforms business via its $120 million acquisition of CFH Group.
The planned sale of 32.3 million Playtech shares will be done by Brickington Trading Limited, one of Sagi’s main holding companies. After the offering, if it goes ahead as planned, Sagi’s stake in Playtech will drop from 33.6% to 23.6%. Sagi and Brickington’s special ‘relationship agreement’ with Playtech will remain in force as long as Sagi continues to own at least 15% of Playtech. However, going below 30% will deprive Sagi of the right to appoint two non-executive directors of Playtech.
The offering will be completed via what is called an accelerated bookbuild with underwriters led by global investment bank UBS, as well as Canaccord Genuity and Credit Suisse.
LeapRate readers will recall that the ‘accelerated bookbuild’ – where the underwriters approach (mainly) institutional investors and build a ‘book’ of orders to get the best price they can for the large share block – is similar to the method used earlier this year by Plus500 Ltd (LON:PLUS) when some of the Plus500 founders sold about £100 million worth of shares into the market.
Accelerated bookbuilds are usually done at a 5-10% discount to the current share price. We’ll see in this case once the underwriters report final numbers, likely within the next day or two.
Playtech shares have traded very well over the past year, and are sitting near all-time highs.
Playtech 1-year share price chart. Source: CNBC.
The Playtech press release reads as follows:
29 November 2016
NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.
(“Playtech or the “Company”)
Proposed Secondary Placing
Playtech plc (“Playtech,” or the “Company”) today announces that it has been advised that Brickington Trading Limited (“Brickington”) is proposing to sell approximately 32.3 million ordinary shares in the Company (the “Placing Shares”) via an accelerated bookbuild through UBS Limited (“UBS”), Canaccord Genuity Limited (“Canaccord Genuity”) and Credit Suisse Securities (Europe) Limited (“Credit Suisse”) (the ” Placing”).
The Placing Shares represent approximately 10.0 per cent. of the Company’s issued share capital. Prior to the Placing, Brickington holds approximately 33.6 per cent of the voting rights of the Company. Following the sale of the Placing Shares, Brickington has agreed not to dispose of any further Playtech shares for a period of at least 180 days, subject to the consent of UBS as well as customary exceptions.
Brickington is a wholly owned subsidiary of a trust of which Playtech’s founder, Mr. Teddy Sagi is the ultimate beneficiary and the Placing is being undertaken in order to further diversify its investment portfolio. Brickington and Mr Sagi both continue to remain highly committed to the Company going forward and Brickington will continue to be Playtech’s largest single shareholder with a 23.6 per cent. holding if all the Placing Shares are sold. Assuming the Placing is fully subscribed, it will significantly increase Playtech’s free float and is expected to allow for increased liquidity in the trading of the Company’s ordinary shares.
Brickington has also agreed that the rights afforded to Playtech in its relationship agreement (“Relationship Agreement”) with Playtech will remain in place following the Placing such that the Relationship Agreement will now only terminate if the holding of Brickington (together with its associates) falls below 15 per cent. of Playtech’s issued share capital. Assuming the Placing proceeds, and the holding of Brickington (and its associates) falls below 30 per cent., Brickington will no longer have the right to appoint two non-executive directors of the Company under the Relationship Agreement. All other provisions of the Relationship Agreement will remain in place.
UBS has been appointed as Sole Global Co-ordinator and Joint Bookrunner and Canaccord Genuity and Credit Suisse have been appointed as Joint Bookrunners (together, the “Bookrunners”) in respect of the Placing, which will be launched immediately following this announcement through an accelerated bookbuild, open to certain existing and new investors. The final number of Placing Shares to be placed and the placing price will be agreed by the Bookrunners and Brickington at the close of the bookbuild process, and the results of the Placing will be announced as soon as practicable thereafter. The timings for the close of the bookbuild process, pricing and allocations are at the absolute discretion of the Bookrunners.
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.