Plus500: Termination of Merger Agreement with Playtech – Update on Plus500 and Ava Trade Ltd 

Further to the determination by Playtech PLC that it will be unable to obtain FCA approval before 31 December 2015, the Company and Playtech agreed to terminate the Merger Agreement. The Board of Plus500 today announces its plans for an independent future. The Board of Plus500 also announces its plan to declare an interim dividend of $0.2121 per share in respect of the 6 month period to 30 June 2015 and share buyback programme.

• Trading continues to be strong.  The trend of customer numbers and revenues announced in the half-year results and the Q3 trading update has continued through Q4.
• Regulatory compliance capability has been strengthened.  The Group has continued to invest in strengthening its management capabilities, particularly in regulatory compliance.  The Group is not subject to restrictions imposed by any of its regulators.
• Product innovation continues.  The Group continues to enhance the range of product and trades available to customers including the recently launched proprietary Apple Watch app.  The Group recently commenced trading of CFDs on options and these have proved to be popular with customers.  Further innovations are under development.
• The Group remains strongly cash generative.  As announced in the half year results, the amount of cash held at 30 June 2015, excluding client balances which are held is segregated accounts, was $95m and further cash has been generated in line with the strong trading.
• Dividend policy confirmed. In the light of the positive trading and the Board’s assessment of the prospects for the future of the Group, the Board re-confirms its base dividend pay-out ratio of 60% of retained profits.
• Interim Dividend of $0.2121 per share announced.  Under the terms of the proposed acquisition by Playtech the Board agreed not to declare an Interim Dividend for 2015.  Following the termination of the merger agreement the Board is pleased to announce an Interim Dividend of $0.2121 per share (representing $24.37m). The Company will issue a separate announcement shortly concerning the record and payment date for this Interim Dividend. It is intended the record date will be in December 2015.
• In addition, the Board has approved a programme to buyback up to $20 million of the Company’s shares. Share purchases will take place in open market transactions and may be made from time to time depending on market conditions, share price, trading volume and other factors.  Such purchases will be made in accordance with all applicable laws and regulations.  The buyback programme, which is expected to commence at the discretion of the Company, does not require Plus500 to acquire a specific number of shares, and may be suspended from time to time or discontinued.  The buyback programme will be funded from available working capital.
• The Board still expects revenue for the whole of 2015 to be ahead of 2014 but with profitability still not expected to match that of last year.

Gal Haber, Chief Executive Officer of Plus500 commented:

“Following the agreement with Playtech that the merger between the companies will not proceed, we can confirm that our business is in good shape for a successful future as an independent company.

Plus500 remains a growing, highly profitable and cash generative company with strong momentum in an expanding international market.  We have adopted a “business as usual” policy during the lengthy acquisition timetable and continued to invest in our marketing, technology and regulatory operations during this period. As a result we are very confident that as an independent business we are well positioned to continue to deliver significant returns for shareholders including the declaration today of an intended interim dividend of $0.2121 per share and share buyback programme.”

Source: Playtech 

Update on the acquisitions of Plus500 Ltd. and Ava Trade Ltd

Further to the Company’s recent announcements, the Board announces an update on its proposed acquisitions of Plus500 Ltd. (“Plus500”) and Ava Trade Ltd. (“Ava Trade”).

Update on the acquisition of Plus500

Whilst regulatory approval for the acquisition of Plus500 has already been received from the Cyprus Securities Exchange Commission, the Company has been in active dialogue with the Financial Conduct Authority (“FCA”) in relation to its proposed acquisition of Plus500, including in relation to certain concerns raised by the FCA which the Company considered could be resolved to the satisfaction of the FCA prior to 31 December 2015, being the effective long-stop date for the transaction to complete.

However, following an update from the FCA late in the afternoon of Friday 20 November 2015 and having considered its position over the weekend, the Board of Playtech is now of the view that the steps being proposed to address these concerns will not sufficiently satisfy the FCA to enable Playtech to obtain the FCA’s approval by 31 December 2015, and is therefore withdrawing its change of control application to the FCA.

Under the terms of the merger agreement with Plus500, Plus500 would have the right to terminate such agreement if completion does not occur by 31 December 2015. The Company has discussed with Plus500 the consequences of the recent developments with the FCA and has agreed to the termination of the merger agreement. Accordingly, the acquisition of Plus500 will not be proceeding as planned.

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

Update on the acquisition of Ava Trade

The Central Bank of Ireland’s (“CBI”) opposition to the acquisition of Ava Trade, which Playtech announced it was appealing on 6 October 2015, triggered a termination right for the sellers of Ava Trade. Although the sellers have not to date exercised this right, Playtech believes that the termination of the merger agreement with Plus500 increases the risk that the Ava Trade sellers may do so.

Should the acquisition of Ava Trade not proceed, Playtech will not incur any financial penalties other than forfeiting the previously announced $5m non-refundable deposit already paid by Playtech on the signing of the acquisition.

Playtech continues to appeal the CBI’s decision to oppose its application to acquire Ava Trade.

Outlook

Playtech’s Gaming division continues to enjoy double-digit underlying growth with a strong pipeline of opportunities providing confidence in maintaining momentum.

Playtech remains committed to growing its Financials division, both through driving organic growth and through acquisition, although this vertical is unlikely to have the scale of contribution to the group in the near to medium term that had previously been anticipated as a result of the acquisition of Plus500 not completing.

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.

Source: Playtech

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