September 17, 2024 07:13 GMT
Playtech (PTECLN Secured; Ba2/BB CW Neg) €2.3b sale of consumer arm
CONSUMER CYCLICALS
In-line with yesterday's leaks the consumer arm Snaitech (55% of group revenues, 59% of EBTIDA) has been sold to local issuer Flutter;
- EV of €2.3b (all equity) at a 9x EBITDA multiple, full in cash
- €1.7-€1.8b to go to shareholders (eqv. £4.56-4.83/share vs. yesterday's close of £7.5)
- €350m to pull the now par callable 26s
- €100m in bonuses to Playtech's senior team and separate €34m bonus pool to the sold consumer arm's senior management.
- Closed expected by 2Q25
Above is in-line with out assumptions yesterday. Leverage will move from net/gross 1.2x/1.7x to 0.1x/2.1x (note it reports lower as it excludes the €90m in leases). We do not view the transaction as credit positive;
- remain-co is €684m revenue and €182m in EBITDA - very small in scale
- has a number of JV arrangements (Moody's comments and see Caliplay issues)
- any ongoing issues in Caliplay become more pronounced to remain-co;
- On Calipay it said yesterday revised terms will take effect in 1Q25 and will mean €30-40m less cash flow vs. FY24. Current remain-co guidance MT target of €200-250m EBTIDA may be subject to revision once finalised.
- will likely lever BS back up; "following the repayment of the 2019 Notes (EUR€350 million), the Playtech Group will have a strong financial footing from which to execute an accelerated growth plan".
We do not see the €28s compensating for the above risks. It's still a win for Playtech mgmt and shareholders; Snaitech was acquired in 2018 for €846m/6x earnings - it has CAGR'd EBITDA at just shy of 11% over the last 6 years and grown the value of the business at 18%/yr.
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