Playtech to fund Plus500 deal with £250m share sale
Firm to sell almost 10% of its share capital to fund £459.6m purchase of Plus500 but insists move will improve efficiency
Playtech this morning announced it will sell off 9.9% of its share capital to raise around £250m to fund its planned £459.6m acquisition of financial trading company Plus500.
A placing of more than 29 million ordinary shares will see founder Teddy Sagi’s Brickington investment vehicle purchase 33.6% of the new shares – the same percentage it currently holds in Playtech.
In a statement, Playtech said the placing was in line with the firm’s “strategy to acquire profitable, regulated, cash generative businesses with market leading positions”.
The firm also said it was in the process of securing debt facilities in order to maximise capital efficiency for its ongoing acquisition strategy.
“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,” Mor Weizer, Playtech CEO, said.
“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,” he added.
In an investment note this morning, analysts Cenkos said that it viewed the apparent failure of Playtech finalise the 300-350m debt, alluded to when the acquisition was announced, as “disappointing”.
But it added that current trading was strong and that the placing also suggested Playtech was confident of completing the acquisition, and continued to rate the firm as a “buy”.
Playtech shares fell almost 5% on the announcement, but had begun to recover by mid-morning.
Playtech also announced this morning that it had acquired 9.36% of Plus500’s ordinary share capital. It added that Plus500 founders and members of management, which represent 35.6% of its share capital, will now attempt to procure a vote in favour of accepting Playtech’s cash offer of 400p per share.
Earlier this month Playtech caught the financial market off-guard when it revealed it had agreed terms on the purchase of Plus500, with Weizer saying the firm “remain very acquisitive in identifying potential acquisition targets”.