Dissatisfied shareholders voice opposition following revelation of €100 million incentive plan for Playtech's executive team.
Playtech Announces €100 Million Management Payout Amid Snaitech Sale to Flutter
Playtech, a British gambling company listed on the London Stock Exchange, has announced a €100 million payout to its management following the announcement of the sale of its Italian subsidiary, Snaitech, to Flutter. The deal still needs to be approved by the competition authorities.
Snaitech, founded in 2017 through the merger of Snai S.p.A. and Cogetech, is a leading Italian gaming company that offers sports betting, slot machines, and casino games. It boasts 291,000 monthly active users and a 9.9% market share in online gaming and sports betting. The acquisition of Snaitech by Flutter is expected to significantly strengthen Flutter's market share in Italy.
Playtech, founded in 1999 by Teddy Sagi, is a leading international developer and provider of software solutions for the digital gaming industry. The company operates its own platforms such as Virtue Fusion for online bingo and iPoker, one of the largest poker networks worldwide. Playtech offers software for online casinos, sports betting, poker, bingo, mobile games, and live dealer games, in addition to services in data analysis and responsible gaming.
The planned sale of Snaitech to Flutter is a success for Playtech. However, shareholders are expressing concerns over a clause that entitles the Playtech management to a 10% share in the future sale of any other division of the company. Shareholders are particularly upset about this clause, as they feel it may dilute their own shares and returns.
There is an additional €34 million earmarked for Snaitech's management, with CEO Fabio Schiavolin set to be the main beneficiary. Playtech's CEO, Mor Weizer, is expected to be the biggest beneficiary of the payout, although exact figures have not been disclosed. Flutter expects positive effects on its share price and synergies of 70 million euros.
Playtech's financial performance after the sale raises questions about such a large payout to management. The company's forecasted EBITDA for H1 2025 is significantly lower than the previous year, reflecting a sharp decline after selling major consumer-facing assets such as Snaitech. This reduction in profitability raises questions about such a large payout to management amid poorer financial performance.
Critics may argue that funds should prioritize shareholder return or reinvestment rather than large management payouts. Despite strong moments like associate contributions and market momentum, Playtech’s share price has fallen 28% over the last year, reflecting possible investor skepticism. A high management payout could be seen as disproportionate given the financial context and share price performance.
However, Playtech plans to return €1.7-€1.8 billion to shareholders via dividends after the sale. Shareholders will benefit from these dividends, totaling up to 1.8 billion euros, as part of the deal. After the sale, Playtech will be able to focus more on its B2B services in the future.
In summary, while the sale of Snaitech to Flutter is a significant milestone for Playtech, shareholders are expressing concerns over the €100 million payout to the company's management. The financial performance of Playtech after the sale, the company's strategic shift, and market and shareholder expectations are all factors fueling criticism over the payout. Despite this, Playtech plans to return a significant portion of the sale proceeds to shareholders via dividends.
- The underlined clause in the Playtech-Flutter deal, granting the management a 10% share in future division sales, has raised concerns among shareholders about potential dilution of their shares.
- With the announced €1.7-€1.8 billion dividend return to shareholders after the Snaitech sale, Playtech aims to alleviate these concerns and benefit shareholders despite the large management payout.
- The planned focus of Playtech on B2B services following the Snaitech sale may alter the company's technological and business landscape in the digital gaming industry, potentially impacting various aspects such as sports, weather, and finance.
