Playtech Cyprus Ltd. (LSE:PTEC) is moving forward with the acquisition of Plus500 Ltd. (AIM: PLUS) announced early this month. Playtech Cyprus, controlled by Teddy Sagi, today reported that it had raised £230 million to finance the takeover, and had bought 9.4% of Plus500. At Plus500's current share price, the value of this purchase is £41 million.
The five founders of Plus500, who own a cumulative 35.6% of its stock, have undertaken to vote in favor of Playtech Cyprus's acquisition of Plus500. Odey Management, on the other hand, a UK investment institution that is the largest shareholder in Plus500, has announced that it will oppose the deal.
Playtech Cyprus, which supplies software-based platforms for online gambling websites, expects to acquire Plus500 in a $700 million (£460 million) deal. Plus500 specializes in CFD online contract differences trading in securities and goods. The company charges a commission on the difference between the buying and selling prices. The acquisition is slated to be closed by the end of September, subject to obtaining regulatory permission.
Plus500 announced last month that it was being forced to freeze some of its customers' accounts because of money laundering suspicions. The UK Financial Conduct Authority ("FCA"), which oversees the company's business and the entire sector, trained its sights on Plus500, and result was cruel: the share lost 67% of its value in 24 hours, and concern about the its future only grew worse. The share later recovered, mainly due to a "white knight" Sagi's Playtech Cyprus, which took advantage of the opportunity to submit an offer to acquire Plus500 at a value less than half of its peak value.
Sagi to pay for Plus500 acquisition by issuing Playtech Cyprus shares
Playtech Cyprus's market cap on the London Stock Exchange is £2.3 billion. The company today announced an offering of 29 million shares, amounting to 9.9% of its capital. At the current share price, this will raise £230 million, or half of the price for the Plus500 deal. Sagi, who owns 33.6% of Playtech Cyprus through Brickington Trading, will buy 33.6% of the shares in the offering in order to avoid diluting his holdings in Playtech Cyrpus. The Playtech Cyprus share was down 2.5% today in London trading.
Playtech Cyprus CEO Mor Weizer said, "Playtech's achievements in mergers and acquisition are based on its ability to take the initiative, combined with financial flexibility that enables it to operate from a position of strength. Today's financing round will make Playtech's capital structure more effective, while maintaining the financial flexibility needed to spot worthwhile acquisitions in gambling and financial trading in order to obtain returns for our shareholders in the long term."
Published by Globes [online], Israel business news - www.globes-online.com - on June 18, 2015
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