Playtech’s £460 million takeover of contract-for-difference business Plus500 is set to be abandoned after the UK regulator, the Financial Conduct Authority (FCA), refused to sanction the deal.
Shares in Playtech plummeted by more than 12%, hitting an eight-month low, after the company announced it would not be increasing its 9.9% holding in Plus500, adding “the acquisition of Plus500 will not be proceeding as planned.”
Teddy Sagi, the Israeli billionaire founder of Playtech, attempted to purchase Plus500 in June 2015 when its share price crashed after the FCA forced it to suspend tens of thousands of accounts held by UK customers due to concerns about its lackadaisical money-laundering checks.
Investors in Plus500 were also hit hard with shares falling by 22% during November 23 trading. However, Plus500 Chief Executive Officer, Gal Haber, remains optimistic for the company’s future.
“Following the agreement with Playtech that the merger between the companies will not proceed, we can confirm that our business is in good shape for a successful future as an independent company.
Plus500 remains a growing, highly profitable and cash generative company with strong momentum in an expanding international market. We have adopted a "business as usual" policy during the lengthy acquisition timetable and continued to invest in our marketing, technology and regulatory operations during this period. As a result we are very confident that as an independent business we are well positioned to continue to deliver significant returns for shareholders including the declaration today of an intended interim dividend of $0.2121 per share and share buyback programme.”
$105 Million Ava Trade Deal Also Scuppered
There was a double whammy for Playtech as it also pulled the plug on its proposed $105 million takeover of Ava Trade. The takeover was announced in July, but the Central Bank of Ireland, which regulates Ireland-based Ava Trade, opposed the deal and refused to sanction it.
Playtech revealed to the London Stock exchange that it is to lose a $5 million non-refundable deposit already paid to Ava Trade due to the deal termination, but doesn’t expect any further financial penalties.