Playtech terminates merger agreement with Plus500

23 November 2015

Playtech has opted to pull out of its proposed merger with Plus500 despite last week stating that it was confident of completing a deal by the end of the year. 

News of Playtech agreeing a deal to acquire Plus500 for approximately £459.6 million (€655.3 million/$696.9 million) came out in June, with the deal set to be finalised by September before being pushed back to end of the year.

Playtech cited the “high profile” nature of the agreement and concerns from the UK Financial Conduct Authority as reasons behind this delay, although it stated last week that a decision on its application to the FCA would be made next month and that it was confident the deal would be closed before the end of the current year. 

However, the igaming giant rethought  its position over the weekend and came to the conclusion that it would not be able to satisfy the concerns of the FCA.

“The company has discussed with Plus500 the consequences of the recent developments with the FCA and has agreed to the termination of the merger agreement,” Playtech said in a statement.

“Accordingly, the acquisition of Plus500 will not be proceeding as planned. Playtech will not incur any financial penalties with respect to the termination of the acquisition of Plus500.

“Playtech has no immediate plans with respect to its existing 9.9% holding in Plus500.”

Gal Haber, chief executive of Plus500, also commented on the decision, stating that the company was in “good shape” to continue operating independently.

He added: “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.”

In regards to Playtech’s proposed acquisition of Ava Trade, a deal that was first announced in July of this year, the company said the termination of the Plus500 merger may have an impact on this agreement.  

Playtech in October said that it would appeal the Central Bank of Ireland's (CBI) opposition to the acquisition, which in turn triggered a termination right for the sellers of Ava Trade.

Although the sellers have not yet exercised this right, Playtech believes that the termination of the merger agreement with Plus500 increases the risk that Ava Trade sellers may do so.

Playtech said in a statement: “Should the acquisition of Ava Trade not proceed, Playtech will not incur any financial penalties other than forfeiting the previously announced $5 million non-refundable deposit already paid by Playtech on the signing of the acquisition.

“Playtech continues to appeal the CBI's decision to oppose its application to acquire Ava Trade.”

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