Playtech has been accused of “the most egregious case of shareholder value expropriation in the history of UK public markets” regarding the bonuses senior executives will receive following the sale of Snaitech to Flutter Entertainment.
Last month, Playtech agreed to the sale of Snaitech to Flutter for a cash consideration of €2.3bn, with the igaming provider stating that it will be focusing on its “technology-led offering in high-growth B2B gambling markets with an accelerated growth plan and an extensive portfolio of strategic ventures”.
The company described the transaction as unlocking “significant capital” and in line with the board’s stated strategy to maximise value for shareholders, as once practicable to do so following the transaction’s completion, it intends to return €1.7bn to €1.8bn to shareholders, with the final amount to be determined with reference to the ongoing business’ capital needs.
In addition, Playtech will repay amounts outstanding on its bond of €350m due March 2026, “significantly strengthening” its balance sheet.
However, it is the €1.7bn to €1.8bn return to shareholders that has been criticised, as this features bonus awards for a maximum aggregate amount of €100m to be paid to members of Playtech’s senior team including CEO Mor Weizer and the company’s executive directors.
A separate aggregate cash bonus pool of €34m will also be paid to the senior management team of Snaitech, of which CEO Fabio Schiavolin will be the largest participant.
Playtech also outlined a transformation plan in which “one-off awards will be granted to plan participants (including Playtech’s executive directors) entitling them to share in a pool of value which is equal to up to 10%” of any future shareholder distribution value.
In an open letter to Playtech’s Remuneration Committee Chair Anna Massion, one of the company’s shareholders, Jeremy Raper of Raper Capital, protested against the transaction, calling it “the most egregious case of shareholder value expropriation in the history of UK public markets”.
Raper added that the transaction exemplifies “crony capitalism at its absolute worst”, highlighting how several components of the company’s plan directly violate many aspects of the Governance Code, as well as notifying that he has forwarded the letter to the Financial Conduct Authority as a formal complaint.
Within his letter, Raper also stated that no details are provided on a bonus upper limit or if a portion would be paid in shares, communicating that it is “rather both retroactive and ad hoc; and simultaneously open-ended and tied to any future asset sale management may consummate, irrespective of the fundamental value achieved in any potential transaction”.
He noted: “Management is thus incentivised under the new plans to pull the trigger on any future deal, no matter how destructive to the company, and collect their 10% take, rather than persist in the better course of simply growing the business independently for all shareholders.”
A similar open letter was sent by Palm Harbour Capital Managing Partner Peter Smith on behalf of the investors in the Palm Harbour Global Value Fund, who are Playtech shareholders, to the company’s board Chair Brian Mattingley.
Smith stated that the payment has come “simply because there is a large cash inflow and for no other reason”.
He said: “There is already in place a strong remuneration package with part of it linked to shareholder returns. There is absolutely no need for this additional payment.”
Although no date has been set, Playtech did state that a shareholder circular, required resolutions and a general meeting on the transaction will take place within the next month.
Upon announcement of the deal, the company noted that shareholders who hold interests in ordinary shares representing, in aggregate, approximately 34.38% of the entire issued share capital of Playtech have “irrevocably undertaken to vote” in favour.