Investors Spooked By Playtech Plans

INVESTORS SPOOKED BY PLAYTECH PLANS

17th April, 2012 at 13:32:21
Source: http://www.azonlinecasinos.com

Concerns at deals with the internet gambling software provider's main shareholder

The reaction to Playtech's announcement that it was to spend Euro 95 million on social gaming initiatives through acquisitions from its 48% main shareholder Teddy Sagi (see previous report) was not long in coming Tuesday.

Reuters reported that amidst investor concerns the share price waned, falling as much as 9.7% to 316.66 pence, although there was some recovery later to 335.25p - about 4.4% down.

Simon McGrotty, an analyst at Davy Research, wrote in a note to clients: "Where concerns will be raised is that once again Playtech is acquiring assets from its founder and largest shareholder.

"Ninety five million euros is a significant investment, especially in an area that is relatively unproven - there is no mention of the current profitability of the assets being acquired in this morning's announcement."

Panmure Gordon analysts Simon French and Lindsey Kerrigan commented: "The market will be disappointed by the related party nature of the transactions."

Sagi, whose wealth is estimated by Forbes to be around $1.2 billion, has also provisionally agreed to become a company advisor ahead of Playtech's proposed move away from an AIM-listing to a prime market listing where it hopes to gain a place on the midcap FTSE 250 index.

Given the potential conflicts involved in buying assets from a major shareholder, Playtech said in a statement that other shareholders would get to vote on the proposed deal.

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