Gaming software developer Playtech plc has inked a deal to purchase a majority stake in online forex trading platform TradeFX for the sum of €208 million ($224 million).
Playtech is an Isle of Man-based supplier of betting, casino, and poker software, with major gambling operators such as Paddy Power, William Hill, and Betfair being among its customers. Its partnership with British gambling operator Ladbrokes is particularly profitable. The latter company has been distributing all Playtech’s Live Games for more than a year now.
As for TradeFX, it is a trading platform and provider of various payment services owned by Teddy Sagi, who is also known to be the largest stakeholder in Playtech.
Playtech acquired a 91.1% share in TradeFX for the amount of €208 million. The developer is to pay the additional sum of €250 million, provided that the trading platform achieves particular performance objectives by 2017.
Similarly to other companies involved in the online gaming industry, Playtech has been looking to expand its business in different fields and thus, bolster its revenue at a time when authorities are imposing stringent regulations and increasing taxes on some of the world’s biggest gambling markets.
Mor Weizer, Chief Executive Officer of Playtech, commented on the deal as one that will give the company the opportunity to set foot in a “growing and complementary” industry sector. He also said that the acquisition will certainly prove to be a profitable one and will enhance his company’s earnings. Mr. Weizer pointed out that gaming will remain Playtech’s main field of operation.
It is interesting to note that this is not Playtech’s first related-party transaction. As mentioned above, Mr. Sagi is its founder and largest shareholder, as he holds a 33.6% stake in the company. Back in 2011, Playtech purchased PTTS, a software company owned by Mr. Sagi, for the sum of €280 million. One year later, Playtech inked a licensing agreement with Skywind, yet another company managed by the Israeli billionaire.
Simon French, leisure analyst at Cenkos Securities, noted that although some may not be particularly happy about the related-party transaction, Mr. Sagi has proved himself a source of dealflow and has contributed significantly to Playtech’s success and the subsequent benefits for its shareholders.
