Playtika Holding (NASDAQ:PLTK) stock is trending today on media reports that privately held Joffre Capital is looking to acquire a majority stake in the mobile gaming company.
According to a report by Axios, Joffre Capital is planning to buy a majority stake in Israel-based Playtika, which specializes in making mobile games. That news had vaulted PLTK stock 5% higher in premarket trading today. However, the share price has since turned negative and is down 6% in erratic trading. For the year, Playtika’s stock is down 25% at $13.58 a share.
According to the Axios report, private equity firm Joffre Capital is acquiring a majority stake in Playtika at $21 a share. That represents a 55% premium to where PLTK stock is currently trading. While Playtika supports the sale to Joffre Capital, shareholders of the gaming company still need to vote on whether to approve the sale.
Joffre Capital focuses on technology companies and is led by James Lu, a former executive at Chinese tech firm Baidu (NASDAQ:BIDU) who also serves as chairman of the dating app Grindr. Playtika had said earlier this year that it was seeking strategic alternatives, including a potential sale of its business.
Why It Matters
The acquisition by Joffre Capital is good news for Playtika shareholders who will be paid a hefty premium to tender their shares. Founded in 2010, Playtika specializes in mobile casino or gambling games. The company went public in January of last year at $27 a share, giving the company a market capitalization of $11 billion.
However, PLTK stock has struggled since its market debut, with its share price following as low as $11.57. As of yesterday’s market close, Playtika’s market cap was below $6 billion, nearly half of what it was immediately following its initial public offering (IPO). The stock is currently 57% lower than where it finished on its first day of trading. A sale to Joffre Capital appears to be a positive outcome for the struggling stock.
What’s Next for PLTK Stock
Today’s up-and-down trading of PLTK stock indicates that investors are having trouble making sense of the buyout offer from Joffre Capital. It might take a few days for investors to assess and digest the news. However, the premium being offered to shareholders is definitely a positive, especially given the continued slump in the stock since it made its market debut 18 months ago. Investors should watch to see if Playtika shareholders ultimately approve the sale to Joffre Capital in coming weeks.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.