Playtech stumbles after takeover setback

Playtech stumbles after takeover setback

Monday, October 5, 2015 Totally Gaming
Irish financial regulator has opposed the takeover of Ava Trade

Playtech’s share price hit its lowest point in six months today (Monday) after the company announced a regulatory stumbling block in its purchase of online trading platform Ava Trade.

The company – which has made a major move into financial services in 2015 with the agreed purchase of Plus500 – saw its stock price drop below 800p for the first time since April after revealing that its purchase of Dublin-based Ava Trade had been opposed by the Central Bank of Ireland (CBI), which supervises most financial institutions in Ireland.

Playtech’s TradeFX subsidiary struck a deal to acquire Ava Trade for approximately $105m (€93.4m) in July, and an update in September claimed that the takeover would be completed by the end of the year. 

The opposition from the CBI comes despite Playtech having been granted approval from the Financial Services Commission in the British Virgin Islands.

“Late on October 2, the company received a letter from the CBI opposing the proposed acquisition of Ava Trade,” Playtech said in a statement.

“Having taken legal advice and having regard to the circumstances at hand, the company will be seeking clarification from the CBI today (Monday) and to engage with them in order to discuss certain issues raised in the letter which the company believes can be addressed to the CBI's satisfaction.”

Playtech noted that the situation regarding its proposed acquisition of Plus500 – which has been agreed by both companies’ shareholders - remains unchanged, with the deal due to be completed within the next few months.

The CBI has not made its letter to Playtech public, but a spokesperson told TotallyGaming.com: “Acquiring transactions for Central Bank Regulated entities are assessed in accordance with the Central Banks published procedures and the relevant legislative timelines. The Central Bank has no other comment to make.”

Analyst Nick Batram at Peel Hunt said: “News that the Central Bank of Ireland has opposed the Group’s acquisition of Ava Trade is undoubtedly a setback. The questions are, whether this is just a temporary issue and isolated to Ava or whether there is a read across to Plus500?

"Given the scale of Playtech’s ambitions in financials, this uncertainty is not conducive to share price outperformance until there is some clarity."

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