Playtech to Buy Online FX Trader Plus500 in $700 Million Deal

Playtech, Teddy Sagi's gambling technology company, said it expects the acquisition to be completed by the September-end.

Teddy Sagi
Nick Clarke

REUTERS - Israeli billionaire Teddy Sagi's Playtech Plc (PTEC.L) agreed to buy retail forex trading company Plus500 (PLUSP.L) for about 460 million pounds ($703.52 million) in cash to strengthen its position in the online trading platform business.

The deal marks the gambling technology company's second acquisition of a trading platform.

Millions in losses from the sudden removal of a long-held ceiling on the Swiss franc in January spurred a merger and acquisition boom that many major companies in the online currency trading market had long predicted.

The directors of Playtech and Plus500 believe that there is strong potential for synergies through the combination of Plus500 and TradeFX, as Playtech agreed to buy a majority stake in trading platform and payment services provider TradeFX, known for the brand markets.com, for $224 million in April.

Sources told Reuters last month that Playtech was in talks to buy currency trading platform AvaTrade.

Shares in Playtech were the top FTSE-250 Midcap .FTMC losers in early trading on Monday, dropping nearly 5 percent. Plus500 shares rose as much as 9 percent.

Playtech said it would pay 400 pence per share, an 8.1 percent premium to Plus500's Friday close. The deal is expected to add to earnings immediately.

"They are being opportunistic but it's not without risk. Because the issues that are going on at Plus500 are still going on, and we don't how far into those issues we are at the moment, you know, the timing could be fantastic, or it could look a bit silly," Peel Hunt analyst Nick Batram told Reuters.

"I think the market is nervous."

Plus500, a sponsor of Spanish soccer team Atletico Madrid, said last month that some clients' accounts had been suspended as it sought to meet money laundering rules and was in "close talks" with the FCA, Britain's financial watchdog.

Playtech provides software used in sports betting and online casino and poker games and counts Betfair (BETF.L), William Hill (WMH.L) and Paddy Power PAP.I as its licensees.

Playtech said it expects the acquisition to be completed by the September-end, subject to regulatory approval.