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MARKET REPORT: Playtech rockets 58% on £2.7bn Aussie tie-up

Playtech’s numbers came up after the gambling software group accepted a takeover offer at a massive premium, sending its share price rocketing.

The FTSE 250 firm said it has signed a deal with Australian outfit Aristocrat Leisure that will see it acquired for 680p per share in cash, a whopping 58 per cent premium to its closing price last Friday.

The deal values Playtech at around £2.7billion and has been unanimously recommended by the company’s board.

Paying out: Playtech said it has signed a deal with Australian outfit Aristocrat Leisure that will see it acquired for 680p per share in cash

Chief executive Mor Weizer said: ‘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.’

Aristocrat is expected to use Playtech to expand its presence in the US, using the firm’s fast- growing online gaming segment in North America.

Analysts at Peel Hunt hiked their target price for Playtech to the 680p offer price and cut their rating to ‘hold’ from ‘buy’, saying the bid was ‘likely to be accepted by shareholders’.

Stock Watch – Benchmark Holdings 

Shares in Benchmark Holdings shot higher after the fish farming specialist hiked its full-year forecasts.

In an update for the year to October, the company said it had delivered ‘stronger than expected trading’ across its three business lines, flagging cost control and a recovery in its end markets.

As a result, Benchmark – which helps food producers to improve their sustainability and profitability – said its earnings for the year are expected to be ‘significantly ahead’ of current market forecasts of £15.9million.

The shares jumped 11.4 per cent, or 6.5p, to 63.5p.  

The shares rocketed 58.1 per cent, or 249.3p, to 678.5p.

AJ Bell investment director Russ Mould said: ‘At this stage the deal looks like a fait accompli with Playtech’s board in favour and the deal pitched at a healthy premium which should be enough to persuade shareholders of its merits, even if the price falls short of the highs the company hit in 2017.’

He added: ‘In recent years Playtech has had to contend with increased competition, regulatory changes and, of course, a global pandemic. 

The business had also become a little unfocused and untidy. However, it has been in the process of streamlining its operations which, ironically, may only have made it a more attractive morsel for Aristocrat.’

Playtech’s takeover is the latest in a flurry of bidding activity among London’s gambling firms, with Ladbrokes-owner Entain (up 1.3 per cent, or 27p, to 2124p) seeing a £13.2billion swoop from US rival Draftkings last month.

The FTSE 100 dropped 0.4 per cent, or 30.2 points, to 7203.83 while the FTSE 250 inched down 0.07 per cent, or 15.5 points, to 22968.74.

Market momentum was dented by disappointing GDP data out of China, which saw the country’s economy grow by just 0.2 per cent in the three months to October, the weakest quarterly growth figure on record, as it grappled with supply chain bottlenecks, outbreaks of Covid-19 and a growing crisis in its property sector.

The prospect of a slowdown in the Chinese economy weighed on the shares of luxury brands such as Burberry, which fell 1.9 per cent, or 36p, to 1836.5p.

The company relies heavily on demand for its posh scarves and trench coats from China’s wealthier consumers. 

Oil markets, meanwhile, continued to see prices of the black stuff push higher amid increased post-pandemic demand and tight supply. Brent Crude rose to over $85 a barrel, levels not seen since October 2018.

Drax Group, the operator of a biomass power station in North Yorkshire, climbed 1.5 per cent, or 8p, to 540p after a bullish note from analysts at Jefferies.

The broker upgraded the stock to ‘buy’ from ‘hold’, saying it expected Drax to ‘benefit significantly’ from soaring power prices in the UK.

Blue-chip miner Polymetal inched up 1 per cent, or 13.5p, to 1343.5p as it announced first production from its Nezhda gold and silver mine in Siberia. Nezhda is the fourth largest gold mine in Russia containing around 4.4m ounces.

Property firm London Metric only crept up 0.08 per cent, or 0.2p, to 254.4p despite snapping up two sites in London for £20.2million. 

The company said it will spend £1.4m to refurbish the two sites, which have a total size of 44,000 sq ft.

Read more at DailyMail.co.uk