23rd Nov 2015 07:30
LONDON (Alliance News) - Playtech PLC on Monday said it has terminated its agreement to acquire contracts-for-difference broker Plus500 Ltd over concerns it will not be able to secure UK Financial Conduct Authority approval before the end of 2015, and warned that the collapse of the Plus500 deal increases the risk that its purchase of Ava Trade also may get cancelled.
In response, Plus500 outlined its plans for an independent future, proposing an interim dividend of USD0.2121 per share, and a share buyback programme.
Playtech said it had received approval for its acquisition of Plus500 from the Cyprus Securities Exchange Commission, but remained in active dialogue with the UK financial regulator about the deal. The talks were in relation to some concerns raised by the FCA that Playtech considered could be resolved to the FCA's satisfaction before the end of 2015 - the effective long-stop date for the transaction to complete.
However, the company noted that following an update from the FCA late Friday afternoon, and having "considered its position over the weekend", it is now of the view that it will not be able to take steps to sufficiently satisfy the FCA and secure approval by the end of the year.
Playtech said it will not incur any penalties in relation to terminating the deal and says it has no "immediate plans" in regards to its 9.9% stake in Plus500.
The company continues to appeal the Central Bank of Ireland's decision to oppose its acquisition 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," Playtech said. If so, Playtech would lose its non-refundable USD5 million deposit already paid, but would incur no financial penalty.
Playtech said it continues to enjoy double-digit underlying growth and a strong pipeline of opportunities.
Plus500 also stressed that its trading continues to be strong and re-confirmed its base dividend pay-out ratio of 60% of retained profits "in light of the positive trading". It has approved a share buyback programme of up to USD20 million of its shares, which will be funded from its available working capital.
The company reiterated that its revenue for 2015 as a whole will be ahead of 2014, but that profitability is still not expected to match 2014.
"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," said Plus500 Chief Executive Officer Gal Haber in a statement.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Plus500Playtech