Playtech set to spend Will Hill sale cash on special dividend
(City A.M. (UK) Via Acquire Media NewsEdge) GAMBLING software company Playtech is ready to hand shareholders a special dividend of around £100m this week after a drawn-out sale of its stake in William Hill Online has left it with a sizeable cash pile.
The company announced earlier this month it had sold its 29 per cent stake in the bookie's online operation for £424m in cash, which is due to be paid at the end of April.
The deal followed a long valuation process, but Playtech is seen as having achieved an excellent end to discussions. The sale gives Playtech a substantial return on its original £170m investment in 2008.
Although much of the windfall is likely to be invested in acquisitions that will expand the company's reach, analysts are expecting management to hand shareholders 25 per cent of the cash. "We expect Playtech to return the proceeds to shareholders in the form of special dividend," Panmure Gordon analyst Simon French said. "The rest we anticipate will be invested in joint ventures and acquisitions, with an expected focus on the US."
The reward will come as Playtech unveils record annual results, as the rise in online gambling, boosted by expansion in Spain and Italy, means more demand for the company's software.
The FTSE 250 firm, which designs casino, poker and bingo programs for the likes of Bet365 and Paddy Power, is expected to report a 50 per cent rise in revenues to around €318m (£277m). Much of this growth has been driven by the outstanding success of William Hill Online, which Playtech will miss next year, but the firm has identified opportunities for expansion now that it no longer has the same relationship with William Hill.
One such opportunity could be with William Hill rival Ladbrokes, which has failed to convert its strong position on the high street to online dominance.
After repeated delays to the launch of its online facelift, Ladbrokes has launched a big digital push, which has included the €30m acquisition of exchange betting website Betdaq.
A Playtech spokesperson would not comment on strengthening relations with Ladbrokes, but said that the cash from the William Hill Online sale puts it in a good position to develop relations with "all major gaming groups".
(c) 2013 City A.M.
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