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Former Formula One team boss Eddie Jordan has pulled a potential bid for Playtech, the gambling company, because of concerns that a group of Asian investors that recently bought into the company would block the deal.
Jordan’s acquisition vehicle, JKO Play, had been set to propose an offer of 750 per share for Playtech, which provides back-end technology to gambling companies such as Entain. JKO plans to publish a statement on Friday morning announcing its intention to pull out, said three people involved in the process.
Its bid would have put it in competition with Australia’s Aristocrat Leisure, whose offer had been recommended to shareholders by Playtech’s board.
Earlier this month, the UK Takeover Panel extended the deadline for JKO to make an offer from January 5 to January 26, after it announced its interest in November.
Aristocrat’s offer at 680p per share is below Playtech’s current share price, which has surged about 72 per cent since Aristocrat’s bid was accepted by the board last October because of competing interest from the Hong Kong-based asset manager Gopher Investments and JKO.
Gopher abandoned its bid for the company in November.
Two advisers working on the deal separately said JKO had decided not to go ahead with its offer over concerns that a block of Asian investors, who have been building stakes in Playtech since October and now own about 27 per cent of the company, would obstruct any deal that did not meet their perceived value of the company.
“In these circumstances, the economics become tricky for any bidder,” one said.
JKO and Playtech declined to comment.
As part of its offer, JKO had intended to sell Snaitech, Playtech’s Italian business, to Entain in order to help fund the bid, two people involved in the process said. Entain’s rival Flutter bought the Italian gaming company Sisal in December.
The takeover battle is the latest in the gambling sector where companies are increasingly looking to consolidate or find greater financial heft in order to deal with tighter regulations, as well as enter fast-growing new markets such as Latin America and the US.
Playtech, which was founded by the Israeli billionaire Teddy Sagi in 1999, owns the right to acquire a large stake in the Mexican gaming company Caliente and has been steadily expanding its US operations, launching two live casino facilities, through which it streams casino games, in Michigan and New Jersey in December.
Aristocrat intends to go ahead with its bid at the current price, which values Playtech at £2.7bn, despite concerns over the potential for the Far Eastern investors to act together and block any deal, a source working on the offer said.
Aristocrat declined to comment.