UK online gaming and betting firm Playtech is upping the ante in its move into financial trading with a deal finalized on Monday to buy Israel-based Plus500, a contracts for difference broker, for £460 million ($691 million) in cash. Playtech agreed to pay 400 pence per Plus500 share.
The purchase of Plus500 comes just a couple of months after Playtech bought a 91.1% of Sagi’s TradeFX, a platform for options trading, for €208 million ($220 million).
Of note, Odey Asset Management upped its stake in Plus500 to become its largest shareholder in April, surpassing founder Alon Gonen. Odey had a brutal April, down around 20%, as we previously reported.
Shares were off 2.1% at 812.5 p in London trading, and Plus500 shares zipped up 8% to the 400 p offer price, before slipping to the 370-380 p range.
More on Plus500
Plus500, based in Israel and listed on a London stock exchange, has been closely scrutinized by regulators recently after the UK’s Financial Conduct Authority called for a review of its anti-money laundering policies. The firm then put a hold on all transactions for existing customers and temporarily stopped signing up new customers. The action came after the firm came under heavy fire from many short sellers and hedge funds.
In mid-May, before the FCA acted against the firm, shares of the company were trading around 780 p. Of note, the company initially listed on Aim back in July 2013 at a price of 115 p a share.
Cable Car Capital notes:
Customer complaints suggest Plus500 often treats users unfairly and in possible violation of law. I believe Plus500 will face material legal consequences for its treatment of customers, marketing activities, and disregard for local regulatory requirements.
Statement from Playtech
A statement from Playtech noted that although Plus500’s “products, technology and marketing skills remain strong, the recent regulatory scrutiny placed on Plus500 has highlighted the advantages of expanding the operational infrastructure”.
Mor Weizer, the CEO of Playtech, commented that the acquisition would be “transformational for our ambitions to expand Playtech’s wider offering. As an immediately earnings enhancing acquisition, the combination of the two businesses is compelling, enabling us to apply our market-leading products and services to the enlarged financial trading business as we continue to execute our growth strategy for the group.”
Moreover, Playtech was still in an “acquisitive” mode, Weizer said, noting the firm planned to spend around £100 mil ($152 million) in the next month or so, but that it was too early to provide specifics.
