$700 mill Deal - Playtech PLC PTEC Proposed acquisition of Plus500 by Playtech

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

 

 

1 June 2015

 

Recommended cash acquisition of Plus500 Ltd by Playtech plc

 

 

 

The Boards of Playtech plc ("Playtech" or the" Playtech Group") and Plus500 Ltd ("Plus500" or the "Plus500 Group") are pleased to announce that they have reached agreement regarding the terms of a recommended cash acquisition through which the entire issued ordinary share capital of Plus500 will be acquired by Playtech (the "Acquisition").

 

Terms of the Acquisition

 

Under the terms of the Acquisition, Plus500 Shareholders will be entitled to receive 400 pence per Plus500 share in cash. The Acquisition values the entire issued ordinary share capital of Plus500 (the "Plus500 Shares") at approximately £459.6 million.

 

Background to the Acquisition

 

• Playtech has a stated strategy to acquire profitable, regulated, highly cash generative businesses with market-leading positions.
• Following the recent acquisition of TradeFX Limited ("TradeFX"), the online CFDs and binary options broker and trading platform provider, Playtech is a natural aggregator of businesses within this sector.
• Plus500 has developed and operates an online trading platform for retail customers to trade CFDs internationally with more than 2,000 different underlying global financial instruments.
• On 18 May 2015, Plus500 announced that the UK Financial Conduct Authority ("FCA") had required a review of its Anti-Money Laundering ("AML") financial sanction systems and other related regulatory controls which led to Plus500UK Limited ("Plus500UK") prohibiting all transactions for existing customers until additional AML procedures have been completed. As a result, Plus500UK ceased on-boarding new customers.
• Further to this, recent events and associated publicity have meant that Plus500 has become the subject of increased scrutiny and has received additional requests for information from its regulators in the jurisdictions in which it is licensed. Whilst Plus500's products, technology and marketing skills remain strong, the recent regulatory scrutiny placed on Plus500 has highlighted the advantages of expanding the operational infrastructure to support a business of its size.
• Playtech intends to provide Plus500 with access to its market leading technology and infrastructure, in combination with its expertise of operating a multi-jurisdictional regulated business.
• Plus500's Board now expects group revenue for 2015 to be lower than in 2014, with margins expected to be significantly lower due to maintained marketing spend.

 

Strategic and financial rationale for the Acquisition

 

• The Acquisition represents a unique opportunity due to Plus500's market reach, advanced technology, product offering and existing customer relationships globally, which allows it to successfully attract and convert customers.
• The combination of Plus500 with Playtech's recently acquired TradeFX business will enable the combined business to maximise the market opportunity and product offering by utilising the strengths of both businesses.
• Playtech intends to provide Plus500 with CRM capabilities and expertise to maximise customer life time value and improve its standalone financial performance.
• Plus500's management have executed undertakings that they will remain with the business for a period of 12 months from completion of the Acquisition to secure a smooth transition to Playtech management.
• The Acquisition is expected to be immediately earnings enhancing.

​

Expected timetable

 

The parties currently anticipate that the Acquisition will be completed by the end of September 2015, subject to regulatory approval.

 

Recommendations and approvals

 

• The Plus500 Directors consider the financial terms of the Acquisition to be fair and reasonable. Accordingly, the Plus500 Directors intend to unanimously recommend that Plus500 Shareholders vote in favour of the Acquisition at a Plus500 General Meeting which will be convened in connection with the Acquisition. Alon Gonen, Gal Haber, Elad Ben Izhak, Shlomi Weizmann and Omer Elazari have undertaken to procure the vote in favour of the Acquisition in respect of their own beneficial holdings of 40,932,911 Plus500 Shares representing, in aggregate, approximately 35.6% of Plus500's issued share capital on 29 May 2015, being the last Business Day before the date of this Announcement. Liberum Capital Limited ("Liberum") has provided financial advice to the Plus500 Directors.
• In order to proceed with the transaction, the Acquisition requires the approval of Plus500's Shareholders holding the majority of the Plus500 Shares at a General Meeting. Therefore, the Directors of Plus500 intend to send a circular in the form of an information statement ("Information Statement") to Plus500's Shareholders as soon as possible and within twelve days of this announcement, the purpose of which is to convene a General Meeting enabling Plus500 Shareholders to vote on the Acquisition.
• It is intended that the Acquisition will be effected by means of a merger of Socialdrive Limited ("Socialdrive") a wholly owned subsidiary of Playtech into Plus500 in accordance with the provisions of Israeli Companies Law. The Acquisition is not governed by the City Code on Takeover and Mergers ("the UK Takeover Code").
• The Acquisition will be put to the vote of Playtech Shareholders as a Class 1 transaction for Playtech for the purposes of the UK Listing Rules. The Playtech Directors consider the Acquisition to be in the best interests of Playtech and the Playtech Shareholders as a whole and intend to unanimously recommend that Playtech Shareholders vote in favour of the Acquisition at the Playtech General Meeting which will be convened in connection with the Acquisition.
• Brickington Trading Limited, being the largest Playtech Shareholder, has undertaken to vote in favour of the Acquisition in respect of its own beneficial holding of 98,645,782 shares in Playtech representing approximately 33.6 per cent. of the ordinary share capital of Playtech in issue on 29 May 2015 being the last Business Day before the date of this Announcement.
• The Playtech Directors have received financial advice from Canaccord Genuity Limited ("Canaccord Genuity") in relation to the Acquisition. In providing their advice to the Playtech Directors, Canaccord Genuity has relied upon the Playtech Directors' commercial assessment of the Acquisition.

Commenting on the Acquisition, Mor Weizer, Chief Executive Officer of Playtech said:

"Having recently completed the acquisition of TradeFX, the opportunity to acquire Plus500 will prove transformational for our ambitions to expand Playtech's wider offering. As an immediately earnings enhancing acquisition, the combination of the two businesses is compelling, enabling us to apply our market-leading products and services to the enlarged financial trading business as we continue to execute our growth strategy for the Group."

 

Commenting on the Acquisition, Gal Haber, Chief Executive Officer of Plus500 said:

"We are very proud to have built Plus500 in a short time into a significant player in the CFD market. Havingbeen admitted to AIM at a share price of 115p on 24 July 2013 and paid significant dividends during this time, 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."

 

- Ends -

 

Conference call

 

Mor Weizer, Chief Executive Officer of Playtech and Ron Hoffman, Chief Financial Officer of Playtech, will host a conference call today at 8:30am. Details of the conference call are as follows:

 

Dial-in no. UK: +44 (0)20 3427 1918

Dial-in no. Israel: +9723763 0145

Conference ID: 7396893

 

Replay (available for one week)

Dial-in no: +44 (0)20 3427 0598

Conference reference number: 7396893