The recent announcement by Israeli online gambling software giant to cough up almost EUR 100 million on social gaming projects caused a stir among investors. The company operates in full compliance with Israeli gambling laws and plans to focus on social gaming via various acquisitions from Teddy Sagi, the main shareholder.
Israel gambling news learned that following negative reactions by the company’s shareholders the share prices of Playtech plummeted almost 10 percent to 316.66 pence. Later on the prices picked up a little and went up to 335.25 pence, which still represented an overall 4.4 percent drop.
An analyst at Davy Research, Simon McGrotty, came up with a special note for clients: “Where concerns will be raised is that once again Playtech is acquiring assets from its founder and largest shareholder.”
He went on to add: “Ninety five million euros is a significant investment, especially in an area that is relatively unproven – there is no mention of the current profitability of the assets being acquired in this morning’s announcement.”
Panmure Gordon, another analyst, this time from Simon French & Lindsey Kerrigan, had the following to say about the plans of the biggest software supplier to online casinos in Israel: “The market will be disappointed by the related party nature of the transactions.”
Forbes estimates Teddy Sagi’s fortune at about $1.2 billion. The magnate is reported to have agreed to enter the role of the company advisor prior to Playtech’s planned move further away from an AIM-listing to the prime market listing. This move is expected to gain the company a permanent place on the midcap FTSE 250 index.
Analysts agree that all potential conflicts arising from buying assets from the company’s major stakeholder require a vote by the remaining shareholders. Playtech already confirmed that such a vote is to take place shortly.