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23 November 2015
Investors in Gambling group Playtech (PTEC) are folding this morning after the company announced that FCA regulatory concerns have put the kibosh on its June £460m acquisition of troubled CFD-broker Plus500 (PLUS). The deal was designed to provide a life-line for broker and expand PTEC’s online capabilities, however, it is now unconvinced that efforts to satisfy the UK authorities will arrive in time for a year-end deadline. An attempt to soften the news with reinstatement of the 21c interim dividend and launch of a $20m share buyback programme is offering scant relief with investors unmoved by this nor comments that trading remains strong since the end-October Q3 trading update. More focus is being paid to the outlook statement suggesting “2015 revenues ahead of 2014 but with profitability still not expected to match that of last year” as well as the fact that a £850m acquisition-led strategy this year is now firmly up in the air. The PLUS deal collapse is significant for PTEC but it also puts its £70m acquisition of Ava Trade (already rejected by Irish authorities) more at risk, having triggered a termination option for the sellers. No news yet, but they could yet follow investors in asking for fresh cards too.
Mike van Dulken, Head of Research
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