Apparently not chastened by the collapse of its attempted takeover of Playtech, Aristocrat Leisure is likely to remain a player in large-scale mergers and acquisitions, says Fitch Ratings. Aristocrat Leisure’s Dune slot machine, seen in an unnamed casino, above. The company is likely to remain active in industry consolidation. (Image: YouTube) Last year, the Australian gaming device giant attempted to acquire Playtech for $2.84 billion, but that effort encountered headwinds, including competing bids from other suitors and, ultimately, Aristocrat’s inability to convince 75% of Playtech investors to approve the deal. Undaunted, Aristocrat could again return to hunting for takeover targets. Fitch expects Aristocrat to continue to pursue strategic M&A, particularly in the real-money gaming (RMG) sector, given its strong financial flexibility, solid portfolio of slot content, and its lapsed acquisition of Playtech (B2B online supplier),” says the ratings agency. The research firm, which rates the gaming company “BBB-“, says the slot machine manufacturer’s credit profile “has headroom for M&A” and that acquisitions could be funded in that fashion owing to the company’s strong credit position. Aristocrat Acquisitions Likely to Be Digital
Aristocrat is the leading supplier of slot machines in its home country and is a top-three supplier in North America. It has a 20% market share in the US and a higher percentage for premium gaming machines.
With dominance in the land-based slot market established, it’s likely that if Aristocrat pursues acquisition opportunities, it will be on the digital front. That was the allure of Playtech , a gaming software company.
Data confirm Aristocrat’s digital business is growing and much of that growth is attributable to previous rounds of deal-making.
“Aristocrat’s digital business has grown meaningfully through both M&A and heavy investments in new content,” adds Fitch. “Aristocrat’s previous acquisitions of Plarium and Big Fish increased ALL’s digital business from 16% of total revenue in 2017 to 40% at YE 2019. Fitch believes there are limited synergies into Aristocrat’s land-based segment, but its Digital products provides healthy diversification to its core slot business (as evidenced during the pandemic).” Potential Targets
Fitch doesn’t speculate as to what companies could be […]