Aristocrat Leisure shares fall on Plarium sale
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More news: Shares in Aristocrat Leisure lowered on the ASX after the poker machine company announced the sale of its Plarium mobile gaming business to Nasdaq-listed Modern Times Group.
Aristocrat shares were down 1.9% to $64.35, having advanced around 60% over the last 12 months.
Aristocrat is set to report its FY24 results on Wednesday with Jarden analysts expecting the company delivers on NPATA growth guidance. The analysts have an 'overweight' rating on the stock with a price target of $59.
What they said: "Aristocrat Leisure can grow share profitably across all three gaming distribution channels. We are pleased with its recent six-month share price outperformance (after two years of underperformance) but believe expectations have now caught up with earnings," Jarden said.
"We think new information is now required before earnings expectations should be reset higher."
Aristocrat Leisure to sell Plarium business for up to $1.25b
The news: Poker machine giant Aristocrat Leisure has announced the sale of its Plarium mobile gaming business for up to USD820 million ($1.25 billion).
The numbers: Aristocrat’s Pixel United subsidiary will sell Plarium to Nasdaq-listed Modern Times Group for a fixed consideration of USD620 million, and another USD200 million contingent on certain financial targets between 2025 and 2028.
Plarium contributed USD166 million to Pixel United’s profit for the year to 30 September.
The context: Aristocrat said the sale follows a strategic review into its casual and mid-core gaming assets announced in May 2024. The divestment is an important milestone as Aristocrat focuses on growth across its regulated gaming strength in core land-based gaming, real money gaming and social casino opportunities, the company said.
Aristocrat acquired Plarium for USD500 million in October 2017 and generated an internal rate of return in the mid-teens. The company expects the transaction to result in a gain in FY25, with the proceeds to be deployed to fund the company’s long term growth strategy.
The sources: ASX announcement, Jarden research
