Plus500 share price: Playtech edges closer to takeover

on Jun 19, 2015

Playtech Plc’s (LON:PTEC) proposed acquisition of troubled CFDs trading platform Plus500 Ltd (LON:PLUS) now looks imminent, after yesterday’s news that the Israel-based gaming software giant had raised funds to finance the deal and secured a major holding in the company.

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Playtech, owned by Israeli tech billionaire Teddy Sagi, yesterday announced and completed a placing of 29 million shares, representing 9.9 percent of the company’s equity. At 780p per placing share, the move raised about £227 million in gross proceeds, which Playtech will use towards financing the proposed acquisition of Plus500.
Playtech has proposed the acquisition of the CFDs trading platform for £459.6 million, or 400p per share, after Plus500’s stock valuation slumped in late May. The platform had to freeze the accounts of all its UK customers following an unfavourable FCA-mandated review of the company’s anti-money laundering checks. The lock-up caused ‘brutal’ attacks by short sellers and a selloff of the company’s stock, which plunged from 770p to as low as 248p within a few days.
The 400p offer is “compelling for Plus 500 shareholders as it offers a clean cash exit at a significant premium to both the initial issue price and prevailing market value prior to our proposed offer,” Playtech has said.
The deal, however, was met with opposition from Plus500’s single biggest shareholder, London-based hedge fund Odey Asset management, which is run by prominent investor Crispin Odey.
Odey, which increased its holding in Plus500 from 13 percent to 25 percent in the three weeks following the stock slump, said that the proposed 400p per share is an “opportunistic bid exploiting current regulatory issues and risks. In our view 400p materially undervalues Plus500.”
The hedge fund said that it would vote against the proposed acquisition.
Plus500’s management, however, which controls 35.6 percent of votes, backed the deal, calling it “fair and reasonable,” and Playtech yesterday announced it had increased its current stake in the CFDs platform to 9.36 percent through a series of transactions for Plus500 shares on the open market.
Plus500 is holding a special general meeting on July 16 to vote on the deal, and although Playtech’s newly-acquired shares will not be eligible for that vote, their absence will improve the chances of the deal receiving a simple majority-backing, analysts say.
Plus500’s share price surged several percent as Playtech’s moves were announced yesterday, but had dropped back by 1.28 percent to 385.00p as of 09:00 BST today.
Meanwhile, Playtech’s stock had clawed back 0.50 percent to 805.00p, after dropping about two percent yesterday.


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