Online gambling giant Playtech looks set to purchase contract-for-difference trading business Plus500 in a deal worth £460 million.
Plus500, an AIM-listed company, has seen its share price increase by 1.22% to 374.50 on the back of the takeover news, although the proposed deal values the shares at 400.00. This is well below the 750p level that Plus500 stock was trading for in mid-May.
The share price of Plus500 plummeted when the Israeli company revealed a number of its customer accounts had to be frozen on orders of the Financial Conduct Authority after problems with Plus500’s anti-money laundering identity checks become apparent.
This would be Playtech second acquisition in as many months after it purchased contracts-for-difference and binary options broker TradeFX in May for €208 million. According to reports, Playtech would operate both Plus500 and TradeFX as separate brands.
Plus500 has reportedly lost $4 million in revenue from its UK business and warned investors that group revenues are expected to be below the $228.9 million of 2014. Much of those losses stem from the fact Plus500 has stopped accepting new customers as it attempts to clear a huge backlog of frozen accounts, and while regulators from outside of the UK look into the company’s operations.
Playtech have demanded a clause in the takeover that allow them to cancel the deal if Plus500’s situation continues to worsen.
Speaking to The Telegraph, Peel Hunt analyst Nick Batram said:
“The acquisition of Plus500 could turn out to be one of the best deals ever for Playtech, if recent issues at the former are just a temporary setback. However, it could also tarnish a gooD track record if Playtech has been a little premature.”
Lead image courtesy of Business Wire