Eddie Jordan, the former F1 team boss, is no longer interested in purchasing gaming software developer Playtech. Despite creating JKO Play with the hopes of making a play for the company, he has withdrawn his bid. The decision comes following apparent concern about being blocked by a group investment out of Asia.
JKO Backs Down
JKO Play has confirmed reports that it was pulling out of the race. According to the Financial Times, JKO is worried about Playtech’s potential blockage by Asian investors with a 27% stake. JKO tried to get into a deal that had already been reached between Australian gaming company Aristocrat Leisure and Playtech.
Aristocrat had bid $3.7 billion for Playtech in October of last year. Playtech’s board approved the deal. The company also reiterated its support for Aristocrat on Friday. However, Playtech shareholders are reportedly less enthusiastic. Playtech said in a statement:
“The board continues to seek engagement with all of its shareholders regarding the Aristocrat offer. However, a number of material investors have not to date engaged meaningfully about their views on the Aristocrat offer, including certain investors that have disclosed or taken material positions in the company following the announcement of the Aristocrat offer.”Playtech
Those “material investors” assumedly refer to the Asian investors, who only recently began buying into the company. The group is said to be led by Tom Hall, a former Playtech CEO. A shareholder vote will take place on February 2.
Playtech Stock Takes a Hit
Playtech shares fell 14.7% following the exit of JKO. They dropped to 615 pence ($8.34) in early London trading on Friday, below Aristocrat’s 680 pence ($9.22) per-share all-cash offer. Large investors have also built stakes in Playtech when the shares were trading at more than 700 pence ($9.49).
Many shareholders expect that the deal will be rejected unless more money is put on the table. But, according to Josh Rosen of United First Partners, “If it intends, as is likely, to salvage the acquisition, Aristocrat now faces little alternative other than to upgrade the offer terms to placate an investor group which has increased positions at prices above the offer level.”
JKO is the second company to decide to cancel its interest in the acquisition of Playtech. Last November, Gopher Investments decided to step away after Jordan arrived on the scene.