PLAYSTUDIOS to Purchase Shares Owned by Microsoft
PLAYSTUDIOS (Nasdaq: MYPS) announced an agreement to repurchase 11,677,398 shares of its Class A common stock from Microsoft at $2.11 per share. The total cost will be $24.6 million, funded by available cash. This transaction will reduce the outstanding shares by approximately 8.6%. CEO Andrew Pascal emphasized that this move aligns with the company's commitment to enhancing shareholder value and maximizing returns on capital, noting the shares were bought at a discount to current market prices.
- Repurchase of 11,677,398 shares, decreasing outstanding shares by 8.6%
- Shares bought at $2.11 each, below current market price
- Total transaction cost of $24.6 million funded by available cash, indicating strong cash reserves
- CEO emphasizes commitment to enhancing shareholder value and maximizing returns
- Significant expenditure of $24.6 million, which could have been used for other strategic investments or operational needs
- Reduction in liquidity due to the cash outflow for the share repurchase
Insights
PLAYSTUDIOS has made a strategic move by repurchasing
Firstly, the repurchase demonstrates the company's confidence in its financial stability and future prospects, given that it is funding this acquisition with available cash. This can be a positive indicator for investors, as it suggests strong cash flow management and a robust financial position.
Repurchasing 8.6% of the outstanding stock will reduce the total number of shares, which can potentially lead to an increase in Earnings Per Share (EPS) and improve shareholder value. Reduced share count means that the profits are now distributed over a smaller number of shares, which could make each share more valuable, enhancing overall shareholder returns.
However, it is also essential to consider that using cash reserves for share repurchase means these funds will not be available for other investments, such as R&D or expansions. Investors should weigh this opportunity cost.
The decision to buy shares from Microsoft at a discount to current market prices also reflects positively on PLAYSTUDIOS' ability to negotiate favorable terms.
The repurchase of shares from Microsoft is notable for its market implications. By reducing the total share count by 8.6%, PLAYSTUDIOS is effectively increasing the concentration of ownership among remaining shareholders. This can lead to more focused and potentially more strategic decision-making within the investor base.
From a market perspective, such a repurchase at a discount can signal to the market that the company's management believes the stock is undervalued. This can boost investor confidence and may lead to a positive market reaction in the short term.
It's also worth noting that Microsoft's decision to divest its shares may raise questions about its view on PLAYSTUDIOS' future prospects. However, given the context of the buyback being at a discount and the strategic benefits outlined by PLAYSTUDIOS, the move should be seen in a balanced light.
From a corporate governance perspective, this share repurchase can have several implications. Reducing the number of outstanding shares can consolidate voting power among remaining shareholders, potentially giving more influence to management and large shareholders. This can be beneficial if the management is aligned with shareholders' interests but requires careful monitoring to ensure continued transparency and accountability.
The fact that the repurchase was conducted at a price lower than the market value highlights the management's ability to make value-accretive decisions. However, it's essential for investors to remain vigilant about the company's plans to ensure that such moves are part of a broader strategy aimed at sustainable growth and not just short-term stock price manipulation.
Shares will be purchased at a price of
Andrew Pascal, the Company’s Chairman and CEO commented, “Since becoming a public company, PLAYSTUDIOS has demonstrated a commitment to enhancing shareholder value and maximizing our returns on capital. Purchasing the shares held by Microsoft is a further example of this as we were able to efficiently repurchase
About PLAYSTUDIOS
PLAYSTUDIOS, Inc. (Nasdaq: MYPS), creator of the groundbreaking playAWARDS loyalty platform, is a publisher and developer of award-winning mobile games, including the iconic Tetris® mobile app, Solitaire, Spider Solitaire, and Sudoku, and its casino-style games such as myVEGAS Slots, myVEGAS Blackjack, myVEGAS Bingo, POP! Slots, MGM Slots Live, and myKONAMI Slots. The playAWARDS loyalty platform enables players to earn real-world rewards from a global collection of hospitality, entertainment, and leisure brands. playAWARDS partners include MGM Resorts International, Wolfgang Puck, Norwegian Cruise Line, Resorts World, IHG Hotels & Resorts, Bowlero, Gray Line Tours, and Hippodrome Casino among others. Founded by a team of veteran gaming, hospitality, and technology entrepreneurs, PLAYSTUDIOS apps combine the best elements of popular casual games with compelling real-world benefits. To learn more about PLAYSTUDIOS, visit www.playstudios.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240611317873/en/
Investor Relations
Samir Jain, CFA
samir.jain@playstudios.com
Media Relations
BerlinRosen
media@playstudios.com
On the web
www.playstudios.com
Source: PLAYSTUDIOS, Inc.
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