CEO Weizer outlines Playtech's blueprint for future growth
Supplier's CEO says three-pronged strategy of targeting media companies, new markets and game-changing acquisitions will take Playtech to the next level
Playtech’s three-pronged strategy consisting of structured agreements with media companies, international expansion and remaining highly acquisitive will spearhead the company over the coming years and drive shareholder value, its chief executive Mor Weizer has said.
Speaking to eGaming Review as part of the firm’s H1 results disclosure yesterday (Thursday), Weizer revealed that Playtech’s most recent partnership, signed with a “major Italian media brand”, was part of an ongoing effort by the firm to target companies with exceptional media assets to help drive player acquisition and marketing.
The deal follows hot on the heels of its bingo agreement with Trinity Mirror, a partner Weizer says is “very well positioned in the UK market”, and under which Playtech is to provide a full turnkey solution including its Virtue Fusion bingo platform and marketing services.
And more deals along a similar vein are in the pipeline. “I will say broadly the Trinity Mirror and Italian media brand [deals] are not one-offs. This is part of our strategy and definitely something that’s in line with what we’ve communicated,” Weizer adds.
Far from just bolstering the company’s supplier portfolio, Playtech views the deals as the perfect means of diversifying.
Rather than simply supplying online gambling firms who themselves are penny-pinching ahead of changes to the UK’s new taxation regime, deals with media companies represent relatively unchartered territory. “It gives us upsides that extend beyond just software income streams, and that’s the right thing for the company,” Weizer says.
The acquisition profile
But while Playtech has gone about expanding its revenue streams, most discussion has centred around precisely what the firm intends to spend its significant cash balance on. Although reduced by a special dividend in March this year, Playtech still has a cash balance in excess of 360m, a sum Weizer labels “significant firepower” for the M&A market.
This, however, is nothing new with Playtech boasting such spending power since William Hill purchased its stake in William Hill Online for £424m in March 2013. Since then, Playtech’s bolt-on acquisitions have been relatively modest.
Its 38.3m acquisition of PokerStrategy in July last year is soon to be followed by the purchase of a 33.3% stake in bingo provider BGO for £10m, while more minor additions, such as live casino facility Euro Live Technologies, have also taken place.
However the market, and Weizer himself expects more “ earlier this year he said the company was looking to execute a “transformational” acquisition. Recent rumours have linked the firm to far more illustrious targets, but Weizer insists the firm simply hasn’t been able to find deals which would deliver the desired shareholder return to date.
Weizer says the company was interested in acquisitions at more reasonable multiples “ between the six to seven mark “ but such deals have been hard to come by. He expects this to change towards the end of the year as regulation takes effect in the UK, leading to what he refers to as a “ripening of the environment”.
“An atmosphere will be created for us to move forward with our plans, and we’ll update the market accordingly,” he says. As far as acquisitions are concerned it’s very much a case of ‘watch this space’, with Playtech keen to expand its reach not just from a product perspective, but on a global scale too.
Spreading its wings
“Playtech before, even though it was very successful, was focused very much on Europe. Now, as part of an informed decision, we’ve decided to further diversify and look elsewhere,” Weizer says.
This sentiment is clear to see in the firm’s results which show an increasing migration away from Europe and particularly into Asian markets. In H1 2014 the firm derived 57% of its revenues from Europe and 34% from Asia, a far more even split than the 64/24 share in H1 2013.
This, Weizer says, is down to a commercially-driven objective for the company to reduce its reliance on a handful of markets and enter into as many commercially viable jurisdictions as possible. “We believe we have the right product, the right expertise, the knowhow and we’re best placed in all of those to grow our presence in these markets,” Weizer adds. “We definitely intend to accelerate these plans going forward.”
A number of contracts remain in the pipeline with two structured agreements signed in the last week and the company said it is in advanced discussions with additional licensees for its Geneity sportsbook. Its agreement with Mexico’s Caliente casino sees Playtech embrace South America in a big way and a deal in Africa is nearing completion, one which Weizer says would make Playtech very much a global player.
Yet one market that has so far been untapped is the US, a move which, given revenues generated from regulated states to date, may be a good one. Far from writing off the US altogether, Playtech appears to simply be biding its time. “We remain opportunistic – if some states that present a big opportunity and are commercially viable regulate, then Playtech will not hesitate and will establish itself in the US,” Weizer says.
With the amount of consolidation in the supplier sector recently, Playtech faces sterner competition in the coming months and year. But much like Amaya’s purchase of the Rational Group two months ago, Weizer remains convinced that Playtech could make a game-changing acquisition as the post-PoC landscape takes shape.
And, as the chief executive put himself, it’s very much a case of “watch this space” as far as Playtech is concerned.