Bets off again in Playtech’s takeover of Plus500

Teddy Sagi still owns a 30 per cent stake in Playtech, the gambling software firm

The Israeli billionaire Teddy Sagi’s £460m takeover of Plus500, the financial trading firm, was torpedoed yesterday due to “concerns” raised by the Financial Conduct Authority watchdog.

Mr Sagi is the founder of the gambling software firm Playtech, in which he still owns a 30 per cent stake. In June Playtech made an opportunistic swoop for Plus500, whose share price crashed when it was forced to suspend tens of thousands of UK customer accounts to carry out money-laundering checks demanded by the FCA.

Playtech said there were “certain concerns raised by the FCA which the company considered could be resolved” before the 31 December cut-off date for the deal.

Neither company spelled out the FCA’s concerns, although it is understood they centred on management experience and the previous issue of anti-money laundering systems at Plus500. The regulator has also made it clear that it is focusing its firepower on offshore-registered gaming and financial trading companies. Playtech is based in the Isle of Man and Plus500 in Tel Aviv.

Plus500 specialises in contracts for difference – a tax-efficient way of share trading. In a double blow for Playtech, it added that a smaller $105m (£69m) acquisition of Dublin-based financial trading firm AvaTrade, which Ireland’s central bank had objected to, would not go ahead after AvaTrade ended talks. Shares in Playtech – which still owns a 9.9 per cent stake in Plus500 – slid 9 per cent or 76.5p to 775p on the news, while Plus500’s stock fell as much as 21 per cent at one stage before settling 29.5p lower at 329p.

Before the FCA’s intervention in May, the shares were worth more than twice as much, as the firm – founded by two Israelis Alon Gonen and Gal Haber – was on an aggressive marketing push. Revenues will still be ahead of last year but profits below those of 2014.

Mr Haber attempted to play down the collapse of the deal yesterday, saying that the firm was in “good shape for a successful future as an independent company”. Plus500 stressed that it remained strongly cash-generative. It also reinstated a $24.4m dividend cancelled as a result of the Playtech dea and launched a $20m share buyback.

Alistair Ross of Investec said Playtech would have to find other targets to spend its €700m-plus (£491m) cash pile. “Playtech will continue to search for bolt-on acquisitions to bolster growth in both the financials and gaming divisions.”