Has Plus500 put its regulatory troubles behind it? Sources inform "Globes" that it is believed in London that the renewed examination of the company's customer verification documentation has been completed. The examination was required by the Financial Conduct Authority in the UK, because of money laundering suspicions. Plus500 has not responded to the report.
Plus500, an Israeli company traded in London, specializes in online trading in contracts for difference on securities and commodities, with the company charging a commission on the difference between the buy and sell prices. The regulatory saga began six weeks ago, and led to a sharp fall in the company's share price from a peak of 7.7 pounds in mid-May to a low of less than 2.2 pounds on May 22. The current price is 3.9 pounds, giving the company a market cap of 447 million pounds, about half its peak value.
Another consequence of the crisis was the entry of to Playtech Cyprus Ltd. (LSE:PTEC) into the picture. Playtech, which provides a software platform for online gaming sites and is controlled by Teddy Sagi, announced earlier this month that it intended to buy Plus500 for some $700 million, or 4 pounds per share. This is more than double Plus500's IPO price in July 2013, but far below the peak price.
Plus500's founders undertook to support the sale of the company at the shareholders meeting set for July. A few days after the report of the sale, however, Plus500's largest shareholder, British investment fund Odey Asset Management, which has a 25% stake in the company, announced its intention of opposing the deal. Odey claims that Playtech's bid is opportunistic exploitation of the company's regulatory problem, and represents too great a discount on its true value.
Playtech, meanwhile, which has a market cap of 2.64 billion pounds on the London Stock Exchange, began to establish facts on the ground. Two weeks ago, it announced that it had bought 9.4% of the shares in Playtech on the open market, and that it was raising 230 million pounds to finance the acquisition.
On July 17, Plus500's shareholders will meet and vote on the Playtech bid. Since approval of the bid requires an ordinary majority, and Playtech's founders, who together own 35.6% of the shares in the company, are committed to supporting it, Playtech's share purchases considerably strengthen the deal's chances. At the same time, if the regulatory examination is over, this could have far reaching consequences for Plus500 and Playtech. If the largest shareholder in Plus500 objected to the deal against a background of regulatory uncertainty, it is very likely that the removal of that uncertainty will bolster its opposition to the move, and cause other shareholders to oppose it too.
Separately, Plus500 announced last week that it had upgraded its deal with Spanish football club Atletico Madrid, and that it will be the club's main sponsor for the next two seasons, and possibly beyond that.
Published by Globes [online], Israel business news - www.globes-online.com - on June 28, 2015
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