Playtech commits up to €280m for Sagi marketing assets

Playtech has acquired founder Teddy Sagi’s PT Turnkey Services (PTTS), the holding company for Europartners, one of the largest affiliate programmes in egaming, the software business announced today during its annual results.

In a statement to the stock exchange this morning while announcing its annual results, Playtech confirmed its acquisition of PTTS, that includes Europartners, one of the industry’s largest affiliate businesses with around 50,000 registered partners, from its founder and majority owner for a cash sum of €140m (£120m). The deal could rise to as much as €280m by 2014 depending on PTTS’s performance.

Talking to eGaming Review following Playtech’s annual results presentation, chief executive Mor Weizer said the deal would give Playtech “direct contact with [operators’] players for the first time as well as “direct communication between the operators [its licensees] and their customers”. During this morning’s analyst question and answer session, however, Weizer denied today’s acquisition would move the business closer to becoming a fully fledged operator and make it eligible for additional taxation in various markets.

PTTS achieved revenues of €90m last year and, with more than 50,000 affiliates on its network, makes it one of the most powerful marketing, acquisition and retention businesses in egaming strengthening Playtech’s position as, in its own words, a “single source supplier of online gaming solutions” to new entrants targeting regulated and soon-to-be-regulated markets.

The acquisition will also see the business almost double its staff numbers with 850 PTTS employees based in Bulgaria and the Philippines joining the existing 1,000 personnel located in Estonia, Israel and Australia. PTTS is spread across four divisions including marketing, operations, payment advisory and network management. The marketing services division has five clients ““ four of which are in regulated and soon to be regulated markets, all of which are existing Playtech licensees. The fifth is Casino Gran Madrid in Spain. The remaining divisions have contracts with more 60 clients, Playtech said. It added PTTS is in “advanced discussions with a number of additional potential licensees in regulated and soon-to-be-regulated markets”. Full integration of the businesses is expected in the fourth quarter of this year.

The purchase, due to formally go through at the end of June, is seen as a mere formality with PTTS already providing services to more than 60 of Playtech’s licensees due to its ownership by Sagi who holds a 40.4% share in the software company. It added the deal would see its earnings rise from this year targeting an increase of more than 13% adjusted earnings by 2012.

Chief executive Mor Weizer told eGaming Review that new and existing licensees will now not only be able to access Playtech’s software and games services, but also access “wide ranging marketing capabilities, a 50,000-strong affiliate programme to establish themselves in various markets, segmentation and analysis capabilities, customer retention, and best of breed capabilities that allow them to acquire and retain more players”.

“Europartners will allow us to establish ourselves in and act as a marketing channel into various markets. On top of that you have proactive customer service that is pure retention, customer service and support, and hosting and payment advisory.

“If I’m a local brand and I lack the capability, gaining access to best of breed software and capabilities, but also marketing channels and the affiliates in the market, is a very compelling offer and allows local operators to establish themselves and enjoy first mover advantage. This is a huge platform for growth for us,” he added.

Playtech had another successful financial year that saw revenues grow 24% from €114.8m in 2009 to €142.3m last year. Profits rose 4% from €89.4m to €93.2m.