The Israeli gaming tycoon Teddy Sagi swooped in a £460m rescue takeover of the troubled spread-betting firm Plus500.
The opportunistic move by his Playtech gaming software company comes after a fortnight of turmoil for Plus500. The Financial Conduct Authority (FCA) forced it to freeze the accounts of tens of thousands of UK customers last month to let it carry out money-laundering checks.
Three weeks ago Plus500 was worth £900m, but the AIM-listed stock has been devastated by the freeze, which wiped off about two-thirds of its value at the worst point of the crisis. The shares rose 4.5p to 374.5p yesterday, below Playtech’s 400p offer price.
Plus500, founded by Israelis Alon Gonen and Gal Haber, its chief executive, was until recently on an aggressive marketing push.
The Atheltico Madrid sponsor had been completing money-laundering checks on customers only when they withdrew funds, rather than when they opened accounts. The company believes it will take a month to complete the FCA-mandated checks, costing it $4m (£2.6m) in lost revenues and $2m in costs.
It signed up more than 100,000 new customers last year but admitted yesterday it had “underestimated the challenges brought about by its rapid growth and would therefore benefit from being part of the Playtech group”.
It also expects group revenue this year to be lower than in 2014, with margins “significantly lower” due to spending on marketing, although it expects a recovery in 2016.
Just five days ago, chairman Alastair Gordon said the Plus500 board was “determined to restore the business to full health”. Yesterday Mr Haber said: “We believe that now is the right time to combine the business with Playtech who can provide additional infrastructure and expertise to add to our core skills in products, technology and marketing.”
Mr Gonen and Mr Haber set up the business in 2008 and floated it in 2013 at 115p a share. Until the recent turmoil Mr Gonen was the biggest shareholder, but one of the biggest winners in the deal is likely to be the investor Crispin Odey, who has taken advantage of the recent turmoil to take his stake above 21 per cent, making him the biggest investor.
Mr Sagi owns 33 per cent of Playtech, which he founded in 1999. He also spent £500m buying up Camden Market last year through his Market Tech Holdings business, which floated in December.
The deal allows Playtech to increase its presence in lucrative trades in contracts for difference, which are tax-efficient derivatives based on share prices and commodities. In April Playtech spent €458m (£333m) on TradeFX, another Sagi company which specialises in CFDs and binary options, allowing punters to bet on “yes-no” market events over shorter periods.
Playtech chief executive Mor Weizer said the deal “would prove transformational for our ambitions to expand Playtech’s wider offering”.Reuse content