The past few years have seen a great deal of movement within the iGaming industry. Aristocrat, one of the largest gaming machine manufacturers, proposed a US$3.7 billion acquisition of Playtech in 2021. Given the numerous developments occurring in the dynamic industry, the move was a no-brainer. It would strengthen the two companies and grow their global influence in the rapidly expanding gaming niche. It piqued people’s interest, especially in the Australian gambling industry because the deal was bound to have a huge impact.
The Takeover Agreement
Aristocrat Leisure has come a long way since its inception in 1953 to achieve its current position. The company has evolved over time, achieving a high status through innovative moves. In 2021, the company revealed its acquisition strategy, which would strengthen its position in the gaming industry. The company sought to grow by acquiring Playtech, a gaming company based in London that heavily invests in online gambling. The agreement was intended to help Aristocrat improve its business by allowing the company to reap the benefits of online gaming.
Despite tireless efforts in 2021, the acquisition plan was thwarted in February 2022 when PlayTech’s shareholders rejected the offer. The agreement required the approval of 75 percent of shareholders at Playtech’s annual meeting, but less than 55 percent of ballots were cast in favor of the agreement. By pooling their resources and voting against the acquisition plan, Asian investors played a significant role in killing the deal.
Despite its failure, Aristocrat’s plan to acquire Playtech reveals a lot about the company’s growth trajectory. The following is an analysis of the plan and its expected benefits to the companies involved as well as the gaming industry as a whole.
The Takeover’s Impact on Aristocrat and Playtech
Aristocrat has a reputable control over actual gaming machines all over the world. The company is best known for its dominance in the production of software for land-based casinos. Playtech, on the other hand, focuses on online gaming, making the two companies distinct and complementary. The deal would have benefited both companies if it had been successful.
For starters, the two companies would have formed a single large operating platform, allowing both to expand their reach across different industries. The acquisition meant that Aristocrat would be able to expand into online gaming. Similarly, for Playtech, the agreement meant making inroads into the development of software-based gaming.
Second, the agreement meant that the company would expand into new markets. Trevor Croker, CEO of Aristocrat, explained that the acquisition would increase the company’s ability to scale to other parts of the world. It would provide Aristocrat with access to the lucrative internet market in other countries, particularly in North America. Similarly, Playtech would benefit from Aristocrat’s platforms, which would provide it with easy access to Aristocrat’s already well-established markets.
Expansion into other aspects of the gaming industry would make it easier for both companies to improve their financial positions. For example, if Playtech had merged with Aristocrat, it would have been much easier to increase its full-year earnings. Having more resources would have increased the likelihood of meeting the target statistics. Furthermore, Aristocrat’s share price would have increased significantly on the London Stock Exchange. People would have been more willing to buy the giant corporation’s stock with assurances it would prosper in the near future.
The Takeover’s Impact on the Australian Gaming Industry
Aristocrat Leisure’s business-to-business acquisition strategy would have had a significant impact on the Australian gaming industry. Such acquisitions benefit the market because of their positive contribution during the current post-pandemic period.
The takeover would increase the number of investors as well as their spending in the gaming industry. Shareholders would have purchased more shares if they anticipated exponential growth and the resulting effect on share prices.
Australia can also expect significant improvements in the gaming industry as a result of an increased company collaboration. Combining the resources of Aristocrat Leisure and Playtech would aid in research and development as well as the faster adoption of modern technologies such as cryptocurrencies.
The merger would have also helped to improve the customer experience. For example, players would gain access to a greater variety of games with improved features, as well as an overall improvement in customer experience. This would place Australia’s gaming industry among the best in the world.
Conclusion
The Australian gaming industry is taking shape as a venue for business-to-business transactions. Despite its failure, Aristocrat’s planned acquisition of Playtech demonstrates the industry’s current direction. Most likely, the industry will see more plans like this in the near future. The trend has the potential to accelerate the industry’s development, contributing significantly to Australia’s post-pandemic economy.
