Playtech Investor Ader Wants DraftKings to Make an Offer

Posted on: August 14, 2020, 08:28h. 

Last updated on: August 17, 2020, 10:38h.

SpringOwl Asset Management CEO Jason Ader has an idea for DraftKings (NASDAQ:DKNG): acquire Playtech (OTC:PYTCY), a European gaming company in which his investment firm is a major shareholder.

DraftKings Should Buy Playtech: Investor
SpringOwl Asset Management CEO Jason Ader wants DraftKings to make an offer for Playtech, a company his firm is an investor in. (Image: Reuters)

Ader made the comments in a Friday interview with Bloomberg, just hours after DraftKings reported a wider-than-expected second-quarter loss. The investor’s pitch served at least one end: Playtech’s US-listed shares finished the day higher by almost 18 percent on volume that was 89 times the daily average.

They should be making a stock-for-stock deal with Playtech,” Ader said in the Bloomberg interview. “If I were on their board, that’s what I’d be saying.”

Founded in Estonia more than two decades ago and headquartered in the Isle of Man, Playtech makes software for internet casinos, web-based poker rooms, and online sports wagering, making the company somewhat comparable to GAN Ltd. (NASDAQ:GAN). Playtech also provides software for fixed-odds arcade games, online games, and provides services for scratch games.

New York-based SpringOwl owns roughly five percent of the European gaming firm. A request for comment made outside of the normal business house by to the asset manager’s public relations agency was not returned prior to publication of this article.

Could Make Sense

Playtech has a market capitalization of $1.64 billion, making an all-equity deal easily digestible for the $11.74 billion DraftKings, should the latter heed Ader’s advice. Additionally, the sportsbook operator said it finished the June quarter with $1.2 billion in cash and no debt, meaning it has plenty of flexibility if it wants to go shopping.

DraftKings isn’t commenting on Ader’s idea. But a deal for a Playtech or a similar firm would jibe with the daily fantasy sports (DFS) company’s push for vertical integration, or the ability to offer under one roof consumer-facing sports betting products and the back-end software and infrastructure that powers those offerings.

The sportsbook operator is able to offer that with SBTech, which it acquired in the reverse merger that allowed DraftKings to go public. There could be some overlap between Playtech and SBTech. But the former also has exposures the latter lacks.

Ader told Bloomberg he views DraftKings as richly valued on almost any metric. But buying Playtech would add $118.21 million in revenue, making the buyer’s valuation more sensible in the process.

Let’s Make a Deal

Ader, formerly a member of the Las Vegas Sands (NYSE:LVS) board for eight years, has a reputation for shrewd deal-making in the gaming space.

Four years ago, he was successful in orchestrating a bidding war for Digital Entertainment — then one of SpringOwl’s holdings. More recently, he was credited with being one of the architects of Flutter Entertainment’s (OTC:PDYPY) takeover of The Stars Group. That deal, which closed in May, created the world’s largest online gaming company.

As for DraftKings, the company’s never been shy about trying to make deals. Several years ago, it was close to merging with rival FanDuel. Last year, there were rumors about it making it play for SBTech.

On Friday’s earnings conference call, DraftKings CEO Jason Robins said there could be opportunities in the market, and it would be “attractive” to potentially identify “complementary” assets.