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. The company didn’t specify what the issues were.
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Following an update from the United Kingdom regulator on November 20, Playtech said the steps being proposed to address those concerns won’t satisfy the FCA to be able to obtain approval by the end of the year.
The Financial Conduct Authority (FCA) had been asked to okay a change of control from its current owners to Playtech, however this came in the wake of a clampdown on Plus500’s anti-money laundering procedures.
The termination of the Plus500 deal represents a blow for Playtech who had outlined entry into the financial trading sector through corporate acquisition as a corporate goal at the start 2015.
Here it is important to note that Playtech had discussed the merger with Cypriot financial authorities as well and was even given the nod from the Cyprus Securities Exchange Commission to proceed with the planned acquisition.
After considering the FCA’s proposals over the weekend, Playtech’s board terminated its merger agreement on Monday, it said in a statement.
Playtech completed the acquisition of a fully-diluted 91.1% stake platform and payments services provider Trade FX in May. The shares of the company barely reacted to the news as the fallout of this deal has apparently already been fully priced in by the market. Additionally, it said it remains committed to growing the Financials division through both organic growth and acquisitions, but warned this vertical is unlikely to have “the scale of contribution” to the company in the near to medium term it had previously anticipated.
“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”.
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Shares in Playtech were down 8.9% at 776.00 pence late Monday afternoon, one of the biggest fallers in the FTSE 250, whilst Plus500 shares were down 7.3% at 332.50p.
