Israeli gambling and trading software maker Playtech has abandoned its £459 million ($695 million) deal to buy troubled spread betting company Plus500, after the UK regulator failed to bless the takeover.
Plus500 said in a statement on Monday:
Further to the determination by Playtech PLC that it will be unable to obtain FCA approval before 31 December 2015, the Company and Playtech agreed to terminate the Merger Agreement.
The deal was first announced back in June, meaning Playtech has been unable to get a seal of approval from the Financial Conduct Authority (FCA) for almost 6 months. Plus500 is an Israeli company, but listed on London’s AIM stock exchange.
Playtech says in a statement on Monday:
The Company has been in active dialogue with the Financial Conduct Authority (“FCA”) in relation to its proposed acquisition of Plus500, including in relation to raised by the FCA which the Company considered could be resolved to the satisfaction of the FCA prior to 31 December 2015, being the effective long-stop date for the transaction to complete.
However, following an update from the FCA late in the afternoon of Friday 20 November 2015 and having considered its position over the weekend, the Board of Playtech is now of the view that the steps being proposed to address these concerns will not sufficiently satisfy the FCA to enable Playtech to obtain the FCA’s approval by 31 December 2015, and is therefore withdrawing its change of control application to the FCA.
Playtech says it won’t have to pay any fees and has “no immediate plans” for the 9.9% of Plus500 it already owns.
Playtech’s takeover of Plus500 has been controversial from the start. Plus500’s share price went into free fall back in May after the FCA told the company its anti-money laundering checks weren’t up to scratch. The Israeli-headquartered company lets ordinary people make risky, leveraged bets on stocks and currencies through something called a contract for difference (CFD).
Plus500 had to freeze thousands of UK accounts in the wake of the regulator’s review and the company has been scrambling to fix its problems. While it was doing that Playtech swooped in with a low-ball bid.
The fellow Israeli company’s offered £459 million ($695 million) for Plus500, almost half the £862 million ($1.3 billion) it was worth before the crisis blew up. Hedge fund giant Odey Asset Management, Plus500’s biggest shareholder, says the offer is “an opportunistic bid exploiting current regulatory issues and risks.”
Plus500’s CEO Gal Haber said in Monday’s statement:
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.
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