Playtech’s Forex acquisition spree continues…
The gaming technology holding company, which also owns Markets.com and TopOption – and which still has an outstanding offer to buy Plus500 Ltd (LON:PLUS) – has sealed a deal to buy Ireland based online Forex broker AvaTrade for $105 million.
This deal is a little different. Markets.com’s parent TradeFX had an option to buy AvaTrade, from a previous financing transaction at AvaTrade.
AvaTrade was owned by its two co-founders, CEO Emanuel Kronitz and CMO Negev Nosatzki. Kronitz and Nosatzki have run AvaTrade since its inception.
And Playtech doesn’t seem done. They also agreed a €200 million unsecured revolving credit facility with Barclays and RBS, to target more acquisitions. This comes on top of a £227 million capital raise ($361 million) from the sale of shares, which just closed two weeks ago.
That’s a lot of ‘dry powder’.
The consideration payable to the Sellers under the terms of the Transaction is US$105 million, which is subject to a post-Completion working capital calculation on a cash-free/debt-free basis. Completion of the Transaction is conditional on approval from Playtech’s shareholders and relevant financial services regulators.
In addition, Playtech PLC (LON:PTEC) announced that it has agreed a €200 million unsecured revolving credit facility with Barclays Bank PLC and Royal Bank of Scotland plc, which will, together with existing cash resources, be available to fund the recently announced acquisitions of the Playtech Group and also further growth initiatives.
- Acquisition of a complementary business to build upon the TradeFX acquisition
- The Transaction will substantially expand and enhance TradeFX’s existing position through the diversification of customers and geographies with limited overlap with TradeFX’s business together with the addition of new regulatory licences
- Directly in line with Playtech’s strategy to acquire profitable, regulated, highly cash generative businesses with market-leading positions
- Consideration at attractive multiple of approximately 6x adjusted 2014 EBITDA*
- Expected opportunities for synergies identified as part of integration planning
- Acquisition is classified as a Class 1 transaction due to aggregation with the TradeFX acquisition
- Brickington Trading Limited, Playtech’s largest Shareholder, has undertaken to vote in favour of the Transaction in respect of its 33.6 per cent beneficial holding
* adjusted to take into account certain jurisdictions which may be closed or discontinued in their current form
Overview of Ava Trade
- Profitable and growing B2C online CFD broker, providing services in more than 160 countries and in over 16 languages
- Established in 2006 and headquartered in Dublin, Ireland
- Licensed and regulated in the EU by the Central Bank of Ireland, in the BVI by the British Virgin Islands’ Financial Services Commission, in Japan by the Financial Services Agency and in Australia by the Australian Securities and Investments Commission
- Average Active Customers for five months to 31 May 2015 of 13,400
- Reported 2014 revenue of $69.9 million, with EBITDA of $24.6 million (pre any adjustments for jurisdictions which may be closed or discontinued in their current form).
Commenting on the Transaction, Mor Weizer, Chief Executive Officer of Playtech, said:
The acquisition of the Ava Group is another important milestone in Playtech’s strategy to expand and enhance its overall technology offering through multiple vertical markets. Since the recent earnings-enhancing acquisition of TradeFX and the creation of our financials division we have sought further opportunities to broaden our reach into this vertical.
The Ava Group is a well recognised and established online CFD broker with multiple regulatory licences and a strong customer base with insignificant geographical overlap with the TradeFX Group. We are very excited about the opportunities for the Group arising from the combination of the Trade FX Group and the Ava Group which we are confident will deliver long term value for Shareholders.
Canaccord Genuity is acting as sole sponsor and financial adviser to the Company in connection with the Transaction.
For the official announcement from the London Stock Exchange, click here.