Playtech’s move to takeover troubled Israeli contracts-for-difference trading business Plus500 has surprised investors. The company is offering 460 million pounds for Plus500, but does have the option to walk away from the deal.
Shares in Plus500 have fallen steadily in recent weeks after the company was forced to freeze customer accounts by the Financial Conduct Authority, which had found there were problems with Plus500’s anti-money laundering identity checks.
The purchase is Playtech’s second deal in the financial trading industry in a matter of weeks.
Playtech completed a €208m purchase of CfD and binary options broker TradeFX and said in a release that following that deal, it had become a “natural aggregator of businesses within this sector.”
Playtech plans to operate Plus500 and TradeFX as separate brands and believes that the takeover will “remedy the situation” the Aim business has with regulators, the company said.
Playtech reportedly only started negotiations with Plus500 after shares in the company began to fall.
Plus500 has stopped taking on new customers and is reportedly drawing to interest of regulators in more countries. The company said it has lost $4 million in revenue at its UK business while the investigation has been underway.
The takeover bid includes a “material adverse change” provision that would allow for cancellation of the deal if the situation at Plus500 deteriorates further and the company loses its license, Playtech officials said.
