Playtech says deals for Plus500, Ava Trade terminated

(Reuters) - Gambling technology provider Playtech Plc PTEC.L said its takeover bids for retail forex trading shop Plus500 Ltd PLUSP.L and online derivatives broker Ava Trade fell through due to regulatory concerns.

Shares in Playtech, which was founded by Israeli billionaire Teddy Sagi, fell as much as 12.3 percent in early trading, while those of Plus500 plunged as much as 22 percent.

The terminations dent Playtech’s attempt to build an online retail financial business as tighter regulation of the UK’s gambling industry and higher taxes hurt its flagship betting software business.

The company, which has already spent more than $1 billion this year to diversify into forex trading, said it dropped its $700 million bid for Plus500 as the deal was unlikely to obtain approval from UK’s Financial Conduct Authority by December end.

Playtech also said separately that Ava Trade’s shareholders exercised a right to end the $105 million deal. The right was triggered by the Central Bank of Ireland’s (CBI) announcement last month that it opposed the deal.

Ava Trade is based in Ireland and is regulated by the CBI.

Playtech did not specify the concerns of either regulator, adding that it would still appeal CBI’s decision.

Analysts said the termination of the Plus500 deal meant that the company would have enough cash to pursue further acquisitions.

“Playtech will continue to search for bolt-on acquisitions to bolster growth in both the financials and gaming divisions,” Investec analyst Alistair Ross wrote in a note.

The company said it would lose $5 million in non-refundable deposit already paid to Ava Trade due to the termination, but does not expect to incur any other financial penalties.

Playtech said it had no immediate plans related to its existing 9.9 percent holding in Plus500.

Shares in Playtech closed down 9 percent at 783.5 pence, while Plus500 shares closed down 8.2 percent at 335.69 pence.

Reporting by Roshni Menon and Rahul B in Bengaluru; Editing by Gopakumar Warrier and Anil D’Silva