Gambling software developer Playtech announced today that it has abandoned plans for the acquisition of contracts-for-difference broker Plus500, after the UK Financial Conduct Authority (FCA) voiced concerns about the potential deal.
Playtech revealed plans to buy the online trading services provider for the amount of £460 million back in July. The online gambling technology supplier has been discussing the terms of the deal with the FCA since then. Last Friday, the regulator raised concerns about the proposed merger. FCA officials said that they would not approve the deal, if those issues were not resolved before the end of the year.
Following the update from the UK financial regulator, Playtech said earlier today that it has dropped plans for the purchase of Plus500 as it would not be able to satisfy the FCA’s requirements by December 31.
Here it is important to note that Playtech had discussed the merger with Cypriot financial authorities as well and was even given the nod from the Cyprus Securities Exchange Commission to proceed with the planned acquisition. An approval from the FCA was among the last hurdles that needed to be overcome in order for the deal to be completed.
Despite the transaction being terminated, Playtech will not be subjected to any financial penalties. The company also pointed out that it has no plans regarding its current 9.9% stake in Plus500.
Experts have called the potential deal a lifeline for the smaller Plus500. The company itself faced regulatory problems as it was criticized of poor anti-money laundering controls and had to run identity checks on its customers. It is rather unclear what would happen to the company now as the acquisition deal has been terminated.
The latest announcement is also likely to further challenge Playtech’s purchase of AvaTrade for the amount of £69 million. The proposed deal has already received a serious blow by the Central Bank of Ireland. The bank openly opposed the acquisition, a decision that may eventually result in AvaTrade executing its right to back out of the deal.
If no acquisition is agreed upon, Playtech would lose the $5-million deposit it paid AvaTrade when negotiations commenced earlier this year.
