After seeing its Revenues nearly halved in Q2 (see chart below) following reports that it had its UK business effectively shut down due to anti-money laundering procedure issues, CFD broker Plus500 Ltd (LON:PLUS) saw its share price fall by about 2/3 in late May before rival Playtech PLC (LON:PTEC) – which has been accumulating forex brokers including Markets.com and AvaTrade – stepped in with a £4-per-share bid for the company.
Smart move by Playtech, some said. Not such a great move according to others, feeling that the Q2 revenue drop was just the beginning of a steep decline for the once rapidly growing broker.
Well, it seems as if the Yea‘s have it. Plus500 pleasantly surprised everyone by announcing yesterday that its Q3 revenues nearly doubled those of Q2, back up above $80 million for the quarter. In fact, Plus500’s second best quarter ever.
So how did Plus500’s share price react?
Hardly a wit.
London ticker PLUS was up just 2% on Monday to £3.62 per share.
The explanation, for those who follow LeapRate, should be somewhat obvious. Plus500 is committed to going through with the sale of the company to Playtech at £4 per share (valuing Plus500 at $700 million) – meaning that £4 is the most the shares can be worth.
Unless, of course, the deal doesn’t go through.
That is not just a remote possibility, given that Playtech’s other pending acquisition, AvaTrade, is being opposed by the Central Bank of Ireland (the CBI), which is AvaTrade’s main regulator. The one remaning obstacle to the Playtech-Plus500 deal is also regulatory approval, by the UK’s FCA which regulated Plus500.
As we’ve said before we doubt that the FCA will have a problem with the deal, but as the great Yogi Berra said: Its not over til its over.