The mergers and acquisitions world is full of risks, with one more piece of proof just provided from Playtech PLC (LON:PTEC)…
The company has been waiting for a nod of approval from the Financial Conduct Authority (FCA) for the proposed acquisition of Plus500 Ltd (LON:PLUS) but after an update from the UK regulator late on Friday (November 20, 2015) has decided to terminate the merger agreement with the CFD and Forex broker.
As a result, the proposed deal with Plus500 will not proceed as planned.
Under the terms of the current merger agreement, it will be terminated if not consummated before December 31, 2015. The latest FCA update has made it clear that Playtech will not be able to address the regulatory concerns in a way to be able to get regulatory consent by 31 December 2015.
Playtech will not incur any financial penalties with respect to the termination of the acquisition of Plus500. Playtech has no immediate plans with respect to its existing 9.9% holding in Plus500.
AvaTrade deal
Playtech also provided some info on how the AvaTrade deal was progressing. The Central Bank of Ireland’s opposition to the acquisition of Ava Trade, which Playtech said it was appealing on 6 October 2015, triggered a termination right for the sellers of Ava Trade. Although the sellers have not to date exercised this right, Playtech believes that the termination of the merger agreement with Plus500 increases the risk that the Ava Trade sellers may do so.
In case the acquisition of Ava Trade not proceed, Playtech will not incur any financial penalties other than forfeiting the previously announced $5m non-refundable deposit already paid by Playtech on the signing of the acquisition.
Playtech continues to appeal the CBI’s decision to oppose its application to acquire Ava Trade.
To view the official announcement from Playtech, click here.