Israel-based online gambling company Playtech has dropped plans to acquire troubled UK contracts for difference broker Plus500, after the Financial Conduct Authority (FCA) voiced concerns about the deal that Playtech found impossible to resolve.
Following the news, the stock of Playtech instantly dropped 9.34 per cent to 772 pence ($11.7) and the shares of AIM-listed Plus500 shed 9.9 per cent to 323 pence ($4.89). Playtech continues down.
Playtech said in a statement addressed to the London Stock Exchange: “Following an update from the FCA late in the afternoon on 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.”
The gaming giant added that it has discussed these latest developments with the target company and the two had agreed to terminate their negotiations. The £460-million ($697) deal required clearance from the FCA and Cyprus’ financial watchdog. Playtech got the latter’s approval earlier this year. In its statement, Playtech also said it won’t be charged any penalties with relation to the deal and that it will keep its current holding in the broker, 9.9. per cent, unchanged for the time being.
Plus500’s Chief Executive Officer Gal Haber 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. 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.”
Plus500 fell on black days following the January Black swan caused by the Swiss National Bank, and then became the target of an FCA investigation for questionable anti-money laundering practices in May.
Playtech’s offer for the broker was first announced in June but for a few months it had been unclear whether the negotiations will reach a successful conclusion. The final obstacle on the way was the FCA approval, which Playtech had to obtain by the end of this year.