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Playtech To Buy To Purchase Troubled Plus500 For £460 Million

Plus500 sponsored Spain's Atletico Madrid

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.”

Playtech is the owner of the iPoker Network which is the home for many major sports betting sites’ online poker operations such as bet365, Betfair and Ladbrokes.

Lead image courtesy of Business Wire

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