Aristocrat Leisure Could Pursue Prudent Acquisition Strategy

Slot machine behemoth Aristocrat Leisure Ltd. could pursue acquisitions as an avenue for boosting gaming twist market place portion or adding to its flourishing digital business.

That’s according to Fitch Ratings, which recently affirmed the Aboriginal Australian company’s deferred payment rating at “BBB-” with a “stable” outlook. The search unshakable said the rating is revelatory of Aristocrat’s tough positioning inward the planetary expansion slot political machine market place as swell as the company’s consignment to keeping its equipoise sheet of paper purchase low.

The companionship will keep to care the counterbalance mainsheet conservatively, all patch investment inward its existing portfolio, returning cap to shareholders through and through dividends and opportunistic buybacks, and possible acquisitions,” noted the ratings agency.

Aristocrat commands near 20% of the US expansion slot market, tussling with rivals International Game Technology (NYSE: IGT) and Light & Wonder (NASDAQ: LNW). The manufacturer’s titles include the popular Buffalo series, Crazy Cash, Moon Race, Ninja Moon, and Panda Moon, among others.

Aristocrat Could Eye Digital Deals

Aristocrat doesn’t shy away from big deals. In 2021, the Aboriginal Australian gaming gimmick goliath attempted to win Playtech for $2.84 billion. That elbow grease encountered headwinds, including competing bids from other suitors, and ultimately, Aristocrat’s inability to convince 75% of Playtech investors to approve the deal. Undaunted, Aristocrat could once more coming back to hunting for takeover targets.

It’s possible the company could seem for deals related to its digital business, which accounted for 46% of its revenue endure year, upwardly from 16% inward 2017.

With control inward the land-based slot marketplace established, it’s potential that if Aristocrat pursues acquisition opportunities, it testament follow on the digital front. That was the temptingness of Playtech, a gaming software program company.

“Fitch believes thither are modified synergies into Aristocrat’s land-based segment, but its Digital products provides healthy variegation to its core expansion slot stage business (as evidenced during the pandemic),” added the search provider.

Aristocrat inward an Enviable Position

Aristocrat’s equilibrize sheet of paper is tough enough to imbibe bolt-on acquisitions piece providing for portion repurchases as its liquidity and nett leveraging experience markedly improved since mid-2021.

Fitch doesn’t await a stuff modification to the company’s purchase profile unless it proceeds with a large, debt-fund acquisition. Given Aristocrat’s penchant for keeping the equilibrise flat solid clean, such a dealings may not materialize this year. But even out if it does, the companionship has a rail record of rapidly shaving leverage following purchases inward which it used debt.

“Fitch expects the keep company to continue to follow strategical M&A using its warm surplusage hard currency balances next the AUD1.3 1000000000 equity wage increase that was antecedently earmarked for the nonchurchgoing Playtech deal. The fellowship could also utilization hard cash on deal every year to repurchase shares should M&A non materialize,” concluded the ratings agency.

At “BBB-,” Aristocrat sports a higher credit rating than competitors Everi Holdings (NYSE: EVRI) and Light & Wonder.

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