Monday 24 October 2016

Playtech's $105m pitch for Dublin broker is blocked

Paul O'Donoghue

Published 06/10/2015 | 02:30

The Central Bank in Dublin
The Central Bank in Dublin

The Central Bank has blocked the proposed $105m takeover of Dublin based contracts-for-difference broker AvaTrade by online gambling software giant Playtech.

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Founded in 2006, AvaTrade is a financial services broker headquartered in Dublin. Playtech, which is headquartered in the Isle of Man and was founded by Israeli billionaire Teddy Sagi, announced in July that it had agreed to acquire AvaTrade in an all-share that valued the broker at $105m (€95m).

Last month Playtech, which had sales of €450m last year, said that it expected the acquisition to close by either the end of September or early in October.

However, the company announced yesterday that it received a letter from the Central Bank opposing the deal.

The company said that, having taken legal advice, it would be "seeking clarification from the Central Bank and to engage with them in order to discuss certain issues raised in the letter which the company believes can be addressed to the Central Bank's satisfaction".

Speaking to the Irish Independent, a spokesman for Playtech said: "We are engaging with the Central Bank on this, we can't prejudice ongoing discussions. The process is ongoing [and] hopefully we should update the markets in due course."

A spokeswoman for the Central Bank said: "It is a regulatory issue, we can't talk about individual firms.

"Acquiring transactions for Central Bank regulated entities are assessed in accordance with the Central Bank's published procedures and the relevant legislative timelines. The Central Bank has no other comment to make."

However, it is understood that the transaction cannot proceed without receiving approval from the Central Bank.

AvaTrade had revenues of just under $70m in 2014, with earnings before deductions of $24.6m.

Both Playtech and the Central Bank declined to say when they expect a final decision on the transaction to be made. AvaTrade had not responded to several requests for comment at the time of publication.

Playtech has already received approval for the AvaTrade acquisition from the Financial Services Commission in the British Virgin Islands.

In the meantime, Playtech is awaiting regulatory approval from the UK FCA for a much larger deal, the £460m acquisition of online trading services company Plus500.

Playtech had expected the transaction to be wrapped up by the end of last month, however the intervention by the Central Bank in the Ava Trade deal has raised fears that the acquisition could take longer than expected.

"We don't know whether the FCA will be influenced or not by the CBI, but the Plus500 deal is already taking longer to complete than originally expected," said Nick Batram, an analyst at UK stockbrokers Peel Hunt.

If the Plus 500 deal fell through it "would be a serious blow to Playtech's ambitions in financials", the analyst added.

Playtech said it will "continue to work towards securing the one outstanding regulatory approval".

Irish Independent

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