Playtech Plc (PTEC.L), the online gaming company founded by Israeli billionaire Teddy Sagi, has agreed to pay about 460 million pounds ($700 million) to buy Plus500 (PLUSP.L), a retail forex trading shop feeling the strain of money laundering rules.
The deal will expand Playtech's online trading platform and comes hot on the heels of its entry to the business through the acquisition of a majority stake in Trade FX.
By striking a deal now, Playtech stands to benefit from the turmoil at Plus500, whose market capitalisation has halved since it announced on May 18 that some clients' accounts would be frozen while it conducted more rigorous checks.
"They are being opportunistic but it's not without risk," said Nick Batram, analyst at Peel Hunt. "The timing could be fantastic, or it could look a bit silly."
Playtech said it would pay 400 pence per share for Plus500. The stock spiked to 403 pence early on Monday before retreating to close at 374.5 pence, up just 1.2 percent.
Millions in losses from the sudden removal in January of a long-held ceiling on the Swiss franc has spurred a merger and acquisition boom that some in the online currency trading market had long predicted.
Playtech, which provides software used in sports betting and online casino games, is aiming to carve a niche in currency trading using its technology, particularly as the gambling industry comes under pressure from higher taxes and tougher regulation.
Playtech said it finalised the deal within a week of Plus500's statement on a review by Britain's financial watchdog. Playtech Chief Executive Mor Weizer said he believed Plus500's situation "is capable of being remedied".
Plus500, a sponsor of Spanish soccer team Atletico Madrid, is headquartered in London but runs most of its operations from Israel. Its backers include hedge fund manager Crispin Odey.
Playtech said it expected the acquisition to be completed by the end of September. It might not be its last: a source told Reuters last month that Playtech was in talks to buy currency trading platform AvaTrade.
In an interview on Monday, Weizer declined to comment on specifics but said more acquisitions were possible. "I do believe we will see consolidation over a period of time, and we intend to act as an aggregator," he said.
Playtech's shares closed up 0.5 percent at 834 pence.
(Editing by Anupama Dwivedi and Robin Paxton)