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With the vote on the proposed deal that will see Playtech PLC (LON:PTEC) acquire Plus500 Ltd (LON:PLUS) yet to take place, Teddy Sagi’s business is seeking to raise funds for future acquisitions, including the deal with the retail Forex and CFD broker.
Playtech announced earlier today that it is going to raise about £225 million (or about $350 million) placing up to 29,050,000 Ordinary Shares with the price per Placing Share to be determined through an accelerated bookbuild. The placing represents approximately 9.9% of Playtech’s current issued share capital.
Teddy Sagi will retain his 33% holding in Playtech (via his Brickington holding company) by plowing in more than $100 million of his own money.
And, there are other Forex acquisitions on Playtech’s radar screen.
Playtech has (as of year-end 2014) £692 million of cash in the bank, so if it is successful in its all-cash £460 million purchase of Plus500 its cash resources will be significantly depleted. So it certainly does make sense to raise some money.
Playtech also reported some fairly impressive growth numbers for TradeFX, its unit which includes online trading businesses Markets.com and TopOption.
Brickington, the Company’s largest Shareholder with an interest in 33.6% of the existing shares, plans to take up 33.6% of the Placing in order to maintain its current shareholding.
Canaccord Genuity will act as Sponsor and Joint Bookrunner, whereas UBS will be a Joint Bookrunner and Shore Capital will be Lead Manager to the Placing.
Background to and reasons for the Placing
- Playtech has a strategy to acquire profitable, regulated, cash generative businesses with market leading positions.
- Placing proceeds will be used to fund future acquisitions including Plus500 and, potentially, a midsize B2C broker over which TradeFX has an option to purchase.
- Playtech is in the process of securing debt facilities in order to maximise the Group’s capital efficiency in the context of its ongoing acquisition strategy.
Mor Weizer, Chief Executive Officer of Playtech, commented:
“Playtech’s enviable M&A track record has been founded on its ability to be pro-active, facilitated by financial flexibility which has allowed it to be able to act from a position of strength. Today’s equity fundraising, in conjunction with new debt facilities, which we are in the process of securing, will improve the efficiency of Playtech’s capital structure whilst maintaining the financial flexibility to pursue acquisitions in both the gambling and financial trading space to deliver long term value for our Shareholders.”
Plus500’s Board has voiced its support for Playtech’s proposal of 400p per share in the broker. Odey Asset Management, however, which holds a stake of more than 25% in the broker, has called the offer opportunistic and is likely to reject it at the coming special general meeting, scheduled for July 16, 2015.
To view the official filing with the LSE on Playtech’s share placing, click here.