While a bout of forced selling by one its largest shareholders early this week forced Playtech Ltd. below £4 for the first time since March, shares gained 7 percent today on the back of a deal with Mansion Gibraltar Ltd.
Under the deal, Mansion, a casino client of Playtech's since 2007, will move its poker operation from Bwin Interactive Entertainment's Ongame Network to Playtech's iPoker Network.
Mor Weizer, the chief executive of Playtech, could not be reached by IGN for comment but did say in a prepared statement: "This latest migration provides further evidence of the high calibre of our products and the strength of our relationships with our operators."
A London analyst told IGamingNews this morning that Mansion is thought to be well-funded with solid marketing; though because it is privately held, specific data on liquidity as well as the company's overall financial health are not available. Nonetheless, Richard Carter, an analyst with Numis Securities in London, suggested in a research note this morning that Mansion "has the potential to be a significant licensee over time."
The deal seems to have cheered the London market, anyway, as the software developer -- one of the quoted gaming sector's worst performers this week -- gained 25 pence today.
"The decline over Monday and Tuesday to below £4 was largely to do with a fund, who was a big holder, that had some problems elsewhere with some of its investments and essentially had to sell down some of its stock to gain cash," the analyst told IGamingNews by telephone.
Across September Playtech's shares fell 33.1 percent, as lengthy due diligence on one -- or more -- of the company's affiliates is thought to have engendered a case of the jitters among investors.
"I think it must be a bit of that," the analyst said. "It is a pretty big deal, and clearly they have a link with the company they're acquiring, or the companies they're acquiring, which should make life a bit easier. But still, it's a listed company, it has to go through all the right due diligence and it can't just say let's buy and go ahead."
According to its I.P.O. prospectus, Playtech has connections to eight affiliate companies -- 800Pay Ltd; Emphasis Services Ltd; Gamepark Trading Ltd; Masary Marketing Ltd; Oriental Support Services Inc.; Paragon International Customer Care Ltd; Tech Corporation; and Uniplay International Ltd. -- via Thomas A. Hall, its Asia-Pacific director who controls Emphasis Services Ltd., and Teddy Sagi, its largest beneficial shareholder, who controls the remaining seven.
It is not clear yet which affiliate Playtech will acquire first. Mr. Weizer, 33, a former auditor and financial consultant with PricewaterhouseCoopers, has indicated that the company eventually intends to exercise its call options over all eight companies.
"Eventually, the idea is to exercise all the options," he said on the company's first-half results presentation in early September. "Therefore, we will be able to provide a full turnkey solution, and this is why we intend to do this eventually."
The company currently holds cash of $339.3 million.
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.