Playtech has announced that it is in the process of buying Plus500, in a deal worth nearly £460m.
The online gaming firm said that it would pay 400p a share for the Israel-based and London-listed trading platform. The deal is expected to be concluded by the end of September.
Plus500 has previously been told by the Financial Conduct Authority (FCA) to review its anti-money laundering systems. Consequently, on 18 May it had to announce that some customer accounts would be frozen while it conducted more rigorous checks.
As a result, it is thought that the regulator may look on a prospective takeover favourably when it comes to approve the deal, as Plus500 will be brought into Playtech’s stronger compliance regime.
Since freezing the accounts in May, Plus500’s market capitalisation has halved.
“Playtech are being opportunistic but it’s not without risk,” commented Peel Hunt analyst Nick Batram. “The timing could be fantastic, or it could look a bit silly.”
Gal Haber, chief executive of Plus500 said: “We believe that now is the right time to combine the business with Playtech who can provide additional infrastructure and expertise to add to our core skills in products, technology and marketing.”
Hedge fund Odey Asset Management raised its stake in Plus500, which is a sponsor of Spanish football team Atletico Madrid, to around 19 per cent last week.
Playtech has got a taste for acquisitions in recent times. It bought a majority stake in foreign exchange trading platform Trade FX in April, and is rumoured to be buying currency trading platform AvaTrade too.
INTERVIEW: PLAYTECH CHIEF EXECUTIVE MOR WEIZER
Mor Weizer, chief executive of Playtech since 2007, yesterday told City A.M. that his firm’s audacious acquisition of Plus500 would be “immediately revenue enhancing” for the business.
Weizer, who previously led a subsidiary of Playtech, added that some restructuring would take place within Plus500 but indicated that it would not be drastic.
He also said that he did not expect there to be any redundancies. “I don’t necessarily see that happening,” he said. He added that the purchase fits with the company’s plan to “further diversify Playtech in line with its stated strategy to acquire popular regulated business with market-leading positions”.
Plus500 was hit by a regulatory crackdown over its anti-money laundering procedures. Weizer said: “The recent regulatory scrutiny placed on Plus500 has highlighted that it does not have the necessary infrastructure and regulatory expertise.”
He felt that this problem could be solved by Plus500 joining the Playtech group, and added that his company had conducted extensive due diligence on its new purchase. “This can be dealt with immediately after completing, and maybe before that, and we can remedy the situation,” he said yesterday.
“The FCA and other regulators should be reassured by the fact that Playtech intends to bring its infrastructure and expertise to ensure that the business will adhere to the highest standards,” he added.
BEHIND THE DEAL: CLAYTON BUSH – LIBERUM
1 Bush is in the investment banking team at Liberum, which he joined from Canaccord Adams. He has also worked at Credit Lyonnais Securities.
2 He was the lead banker on Sirius Minerals’ £15m placing in March, and also advised Mediterranean Oil and Gas when Rockhopper bought it last summer.
3 An avid Liverpool fan, Bush claims to have once played at Wembley Stadium, and said he counts the resulting highlights video among his most prized possessions.
Christopher Britton and Josh Hughes join Bush from Liberum on the Plus500side of the deal. Bruce Garrow, Piers Coombs, Cara Griffiths from Canaccord Genuity Investment are acting for Playtech.