Australian-listed gaming manufacturer Aristocrat Leisure is to buy European gaming giant Playtech after making a cash offer valuing the company at £2.7bn, a 58 per cent premium on its closing price last week.

The Playtech board is unanimously recommending shareholders vote in favour of the deal in a year that has seen an unprecedented level of M&A activity. Aristocrat plans to fund the deal with a £864m equity raising, alongside new debt and existing cash.

Aristocrat believes the deal will provide material scale in online gaming, provide revenue growth, reach a broader range of customers and ‘operate and innovate’ in the European market through Playtech’s Snaitech B2C operation.

Aristocrat CEO and managing director Trevor Croker explained: “The proposed combination would bring together Aristocrat’s world-class gaming content and customer and regulatory relationships with Playtech’s industry leading global online RMG (real money gaming) platform (B2B) and European B2C footprint.

“The combined group would offer a broad portfolio of end-to-end solutions for gaming customers around the world, as well as seamless player experiences, underpinned by a shared focus on responsible gameplay and innovation.

“Additionally, the business will be ideally positioned to unlock sustainable shareholder value by seizing opportunities in the fast-growing global online RMG segment as they continue to open up, particularly in North America.”

Croker said that the offer reflects the strategic potential of the merger in the global sector that continues to migrate online. “Adding Playtech’s talented team with Aristocrat’s established strengths and momentum will create a true industry leader in the global online RMG space, particularly in terms of our B2B capabilities.”

The offer represents a valuation multiple of 11.4x Playtech’s adjusted EBITDA for the 12 months to 30 June 2021 and Aristocrat has already made deals with major shareholders for just over 20 per cent of Playtech’s outstanding shares.

Mor Weizer, CEO of Playtech, said of the transaction: “This transaction marks an exciting opportunity in the next stage of growth for Playtech, and delivers significant benefits to our stakeholders, including our customers, our shareholders and our incredibly talented people. This deal has the potential to enhance our distribution, our capacity to build new and deeper relationships with partners, and bolsters our technological capabilities.

“The combination of our two companies builds one of the largest B2B gaming platforms in the world, with the people, infrastructure and expertise to provide our customers with a truly best-in-class offer across all areas of gaming and sports betting.”

Brian Mattingley, chair of Playtech, added: “In recent years, Playtech has successfully repositioned its world leading gambling technology and operations, expanding in strategically important regulated markets and driving major online B2B revenue growth.

“Whilst the business has made significant progress, most notably in the Americas, Aristocrat’s proposal provides an attractive opportunity for shareholders to accelerate Playtech’s longer-term value.