Playtech terminates merger agreement with Plus500

The termination of the Plus500 deal represents a blow for Playtech who had outlined entry into the financial trading sector through corporate acquisition as a corporate goal at the start 2015.

Amidst concerns from the Financial Conduct Authority (FCA), Playtech cited the “high profile” nature of the agreement as the reason behind this delay.

Playtech did not mention what concerns were raised by the FCA.

The Israeli company said that it did not believe it would “sufficiently satisfy” the FCA by the end of the year, and has consequently withdrawn its application to the regulator.

“Playtech is in the process of evaluating its options with regards to its significant cash balances following the termination of the acquisition of Plus500, taking into account the availability of suitable value-enhancing acquisitions across the business”. It is rather unclear what would happen to the company now as the acquisition deal has been terminated.

Playtech will not incur any financial penalties related to the termination and said it has no immediate plans with respect to its existing 9.9% holding in Plus500.

Playtech had announced four acquisitions since the beginning of the year worth about $1.3 billion.

Gal Haber, chief executive of Plus500, also commented on the decision, stating that the company is in “good shape” to continue operating independently.

As a result, and with the Central Bank of Ireland (CBI) opposing it, Playtech said there’s now an increased risk of its proposed acquisition of Ava Trade not going through.

Under the terms of the merger agreement with Plus500, Plus500 had the right to terminate such agreement if completion did not occur by December 31.

Playtech feels that the failure to complete the Plus500 acquisition puts more doubt on the Ava Trade agreement.