Playtika Bid for Angry Birds Maker Criticized by BTIG Analyst
Posted on: January 20, 2023, 04:51h. 
Final updated on: January 20, 2023, 08:00h.
Playtika’s (NASDAQ:PLTK) upped supply for Angry Birds producer Rovio Entertainment Corporation drew criticism from an analyst that covers the suitor.
In a note to clients right now, BTIG analyst Clark Lampen called Playtika’s enhanced bid “perplexing.” That is when accounting for its $600 million tender offer you deployed in the fourth quarter and a recent $25 million investment in Ace Game. He rates shares of Playtika “neutral.”
Primarily based upon the multiples, margin dilution, balance sheet impacts, and optics of the acquired company, the deal is a bit of a stretch,” wrote Lampen.
Yesterday, Playtika announced a new provide for Rovio, then valued at $9.78 a share, based on Thursday’s foreign exchange rates. That all-money bid was a 55% premium to where the target’s shares closed on Wednesday, and properly above the 40% premium floated last November when the suitor created its initial offer. It is believed the original offer was turned away due to higher insider ownership at the Finnish company.
Playtika Investors Might Not Be Enthused by Offer
On a sturdy day for development stocks, Playtika surged 7.48% right now. But that does not mean investors are keen on the boosted offer for Rovio. In reality, the opposite could be true.
“On the surface, this is an acquisition that we count on investors would have a hard time rewarding Playtika for in the brief run,” Lampen said.
Some industry observers previously highlighted Playtika’s fragile balance sheet, reduced income per daily active user and declining margins as concerns the organization demands to address before embarking upon on large-scale acquisitions.
BTIG’s Lampen noted the obtain of Rovio would “effectively drain Playtika’s balance sheet money,” leading to net leverage of two.3x earnings just before interest, taxes, depreciation and amortization (EBITDA).
Detractors are also apt to note that Playtika is practically a year removed from announcing a strategic review that could have included a possible sale. Such a deal hasn’t materialized, and now the organization is moving in the opposite direction by pursuing an acquisition.
Playtika Rovio Bid May Have Supporters
Rovio investors clearly liked the increased offer you from Playtika, as the target’s shares surged 36% in Helsinki these days. Moreover, there could be help for the transaction amongst the suitor’s investors, regardless of the drab analyst commentary.
“Deal defenders recommend a Rovio get fits Playtika’s method of fitting smaller games/studios into its Increase reside operations assets – or that adding Rovio’s development would assist management exceed PSU grant targets while also decreasing the potential for Playtika’s most significant shareholder (private Giant Group) to strip away balance sheet money that would be much more productive elsewhere,” according to Looking for Alpha.
Playtika, which has much more than 27 million month-to-month customers, gives games such as Bingo Blitz, Caesars Slots, and Poker Heat, in addition to WSOP social.