UK's Playtech buys 70.6 percent stake in Snaitech in regulated market play

(Reuters) - British gambling technology company Playtech said it agreed to buy a 70.6 percent stake in Italian betting and gaming firm Snaitech for 291 million euros ($359.2 million) in cash, in a move to source most of its revenue from regulated markets.

Playtech would be required to make a mandatory takeover offer for the remaining stake in Snaitech on completion of the 70.6 percent stake purchase, it said on Thursday.

Including Snaitech’s debt, after it makes the mandatory takeover offer, the enterprise value of the company would be 846 million euros ($1.05 billion), Playtech said.

The stake buy, agreed with certain shareholders in the Italian company, would mean 78 percent of revenue for the enlarged group would come from regulated markets.

Snaitech is fully regulated in the markets in which it operates, Playtech said.

The deal, which would be funded by Playtech’s existing cash and new debt, is expected to deliver cost synergies of 10 million euros.

Snaitech, which is also involved in racetrack management and television services, generated revenue of 890 million euros and core earnings of 136 million euros in 2017.

For Playtech, the Italian deal comes in the backdrop of sweeping regulatory changes at its UK home market, where lawmakers have hinted at drastic cuts on top stake limits in gambling machines.

Playtech began 2018 with a lag in its gaming division revenue following a crackdown on gambling syndicates in Malaysia, one of its largest Asian markets.

However, the Milan-headquartered Snaitech, which has more than 1600 betting points in Italy, is also involved in sports and horse-race betting, online sports betting and casino games.

The mandatory takeover offer, if the initial acquisition completes, would be at the delisting of Snaitech from the Milan Stock Exchange, Playtech said.

(Corrects headline and first paragraph to say Playtech will buy 70.6 percent stake for 291 million euros, not 846 million euros. Adds total enterprise value of 846 million euros in third paragraph)

Reporting by Rahul B in Bengaluru; Editing by Sunil Nair