Luckbox owner Real Luck Group has signed a letter of intent to acquire an Asian-focused iGaming platform in an all-stock deal.
The deal is expected to close by the end of 2022, subject to TSX Venture Exchange approval.
The acquisition is set to take place as a share exchange on a debt free basis, with Real Luck acquiring 100% of shares in the undisclosed target business.
Luckbox will hand over up to seven million common shares in exchange for the business, six million of which will be payable dependent upon it reaching certain milestones by January 2025.
With Real Luck Group shares currently trading at C$0.11, that gives an implied maximum valuation for the business of around C$770,000.
In return for the shares, Real Luck will receive the target’s proprietary platform and technology, currently offering access to over 6,000 games from 50 suppliers in addition to 100 localised payment methods.
The B2B platform will become an integral part of Real Luck’s business and help enhance the core Luckbox product offering, the firm said.
Real Luck Group CEO Thomas Rosander: “Adding B2B to our proprietary platform has always been a significant part of the Luckbox strategy, and this important acquisition means we will complete this objective almost a year in advance of our projections.
Commenting on the acquisition, Real Luck Group CEO Thomas Rosander said: “Adding B2B to our proprietary platform has always been a significant part of the Luckbox strategy, and this important acquisition means we will complete this objective almost a year in advance of our projections.
“It also extends our opportunities into APAC, a significant region that we currently do not have a presence in and perhaps the largest esports market globally. This transaction ultimately builds our business’ upside by providing immediate access to a large player base.
“This all-stock transaction further validates our strategic growth plan, with both companies sharing a common Luckbox vision. The newly announced acquisition, which is expected to close by the end of the year, will further accelerate our growth and footprint in global markets as we head into 2023 and beyond.”
The deal was announced alongside Real Luck’s Q3 financial results.
The business generated just C$38,016 in revenue in the third quarter, though that represented a more than fivefold increase over Q3 2021.
After some C$2m in expenses, the business declared a net loss of C$1.97m for the quarter.
Those figures brought total revenue for the first nine months of 2022 to C$70,484 and net loss for the period to C$6m.
As of the end of the period, Real Luck Group held C$9.5m in total assets, including C$8.8m in cash and cash equivalents.
Commenting on the results, Rosander said: “Q3 was about ramping up our player acquisition initiatives. As reported, our record Q4 key performance indicators are a testament that our scalable plan is delivering above our expectations.
“We are already seeing significant improvements for growth in Q4 2022, as we now focus on driving additional player value, deposits and wagers on our platform.”
Indeed, following the end of the reporting period, the business saw a record number of player registrations in October, coming in at more than 25,000.
The number of active players grew 16-fold from August, the firm said, while stakes placed across all verticals grew 252% in October compared to September.
Playtech’s board of directors has once again urged shareholders to vote in favour of Aristocrat’s 680p per share offer to acquire the company.
The board was forced to release a statement reiterating its position on 26 January after a Sky News article suggested it was looking to dismantle and sell off its separate divisions should the £2.7bn Aristocrat offer be voted down at a general meeting on 2 February.
“While Playtech has made significant strategic and operational progress and is in a strong position for the future, Aristocrat’s proposal provides an attractive opportunity for shareholders to accelerate the delivery of Playtech’s longer-term value,” said the supplier.
A favourable vote for Playtech is reportedly in jeopardy due to a group of Asian-based shareholders, accounting for roughly 25% of the firm’s shares, working in tandem and allegedly seeking to block the Aristocrat deal for reasons which have yet to be confirmed.
Playtech requires the backing of 75% of shareholders to vote the deal through but is lacking confidence due to a lack of engagement from shareholders over their voting intentions.
“The board continues to seek engagement with all of its shareholders regarding the Aristocrat offer,” said the London-listed supplier in a statement last week.
“However, a number of material investors have not to date engaged meaningfully about their views on the Aristocrat offer, including certain investors that have disclosed or taken material positions in the company following the announcement of the Aristocrat offer.
“The absence of customary levels of engagement means that the board is approaching the Court and General Meetings without a clear understanding of whether these shareholders are supportive of the Aristocrat offer.”
Should Aristocrat’s acquisition fall through, Playtech could be forced to pursue other options, including the sell-off of separate business segments, as first suggested by Sky.
Playtech’s Italian-facing B2C operation led by Snaitech is known to have its admirers and it could also look to offload its unregulated Asian business to facilitate a future sale.
The provider is also a 49% shareholder in Latam leader Caliente, which has been linked with a $2.5bn SPAC spin out on Nasdaq in the US.
Australian gambling technology provider Aristocrat is currently the only company in the running to acquire Playtech.
Hong Kong asset management firm Gopher Investments – which has already purchased Playtech’s financial trading division Finalto for $250m – pulled out of a takeover of the whole company in November 2021.
Eddie Jordan-led JKO Play was the next suitor to withdraw its interest in Playtech amid a rumoured 750p per share offer, citing concerns the deal would be blocked by the rebelling group of Asian shareholders.