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Screenshot of a breaking news alert e-mail from Q2 2017
Here’s a crazy theory: Plus500 Ltd (LON:PLUS) shareholders were the ones who lobbied the UK financial regulator FCA to not approve the company’s takeover by online gaming giant Playtech PLC (LON:PTEC).
While it is probably just that – a crazy (and incorrect) theory – it does look so far that the big winners from the breakup of the Playtech-Plus500 takeover are Plus500 shareholders.
After taking an initial (and expected) hit right after the deal broke up a week and a half ago, shares of Plus500 have been on a tear, up 45% from their intraday low of £3.29 on November 23 (the day the acquisition was called off), including an 11% gain on Wednesday.
At its current share price of £4.78, Plus500 has a market cap of £549 million ($821 million).
The Playtech-Plus500 acquisition was called off after indications given to both parties by the FCA that is was unlikely to approve the deal by year end, a deadline set by both parties for approval after the Plus500 acquisition was first announced back in June. Behind the scenes, we believe that the FCA was indicating that it was unlikely to approve the deal at all, not wanting to grant a financial services license to a company whose other subsidiaries were involved in online gaming.
The same reasoning is likely behind the breakup of Playtech’s other recently attempted acquisition in the Retail Forex space, that of Ireland-based AvaTrade.
So what’s driving Plus500 shares higher and higher?
Plus500 share price since Playtech deal called off. Source: Google Finance.
No real significant news has hit the wires lately regarding Plus500 or the retail forex industry the past few days. However it does look like investors are beginning to warm up to the idea of an independent Plus500, especially given Plus500’s impressive financial results reported in its most recent quarter (Q3). Were Plus500 to continue that trajectory, it is not inconceivable at all that Plus500 shares could return to the lofty £7-8 level they traded at before the company’s UK unit hit some regulatory speed bumps regarding AML and client onboarding procedures earlier in the year.