At the Flick of a Switch, Playtech Forced to Brake on Snaitech-Driven Growth in ItalyPublished March 27, 2020 by Lee R
Progress from the record-setting Snaitech deal has been shelved, per Playtech's emergency investor update.
Corona undoes even the best-laid plans and figures for leading iGaming forces such as Playtech.
Fresh off the first full year of gains from the Snaitech acquisition tabbed to be a key driver of growth and sustainability in 2020, Playtech has suspended operations for its entire portfolio of subsidiary betting shops, arcades, and bingos until at least April 3rd, 2020.
Updating Concerned Investors
The announcement came in the form of a corporate filing updating investors on Italian market contingencies in light of the COVID-19 virus outbreak, and represents the type of update Playtech and all other publicly traded iGaming companies in Italy may be forced to issue for the foreseeable future.
The Italian Landscape
The severe restrictions the government of Italy has been compelled to impose on the movement of the 16 million people of the greater Lombard region and beyond effectively suspends Playtech's biggest M and A deal to date.
High Hopes Pending
The acquisition of Snaitech for €850 million in April 2018 was designed to revitalize Playtech's B2C presence in one of Italy's largest retail networks amid fanfare and robust performance. Barely days ago, Playtech went so far as to designated Snaitech it's “standout performer” in full-year 2019 results, trumpeting a 62% increase in revenues to €830 million (FY2018: €511m) and a healthy EBITDA contribution of €162 million (FY2018: €93m).
Precipitous but Ubiquitous
Now, of course, we are in a new era. In a lighting fast reversal of direction, an investor update to address fears was necessitated after trading on Playtech’s FTSE stock saw the technology group’s share price close at a year low 213p (market high 224p).
Monitoring for Hope
In another sign of the times, Playtech governance concluded the update with assurances that the company will continue to monitor Italian COVID-19 developments closely and will update investors as appropriate.
Hopefully, that update will include a resumption of Snaitech activity at or near the April 3rd deadline; unfortunately, taking that bet appears a foolhardy assumption at this point; while Italy continues efforts to get a rampant situation under control.
Until a cap on the spread of Corona infections and a uniform treatment appears, the best that can be hoped for is that similar investor concerns and iGaming organisational disruptions do not spread to other jurisdictions.