Playtech PLC (LON:PTEC) has today announced that it has conditionally agreed to acquire a 91.1%. fully-diluted stake in retail FX firm and trading platform provider TradeFX Limited.
The consideration payable comprises an initial cash payment of €208 million and an earn out payment of up to €250 million based on future performance.
Highlights
· Compelling opportunity to enter growing and complementary vertical driven by similar core competencies
· Directly in line with Playtech’s strategy to acquire profitable, regulated, highly cash generative businesses with market-leading positions
· Experienced management team, with a proven track record, who will remain with the business
· Consideration at attractive multiple of up to 8x adjusted EBITDA
· Business at inflection point with current annualised EBITDA run rate significantly ahead of 2014
· Acquisition immediately significantly earnings enhancing
· Acquisition is classified as a related party transaction
· Major Independent Shareholders approached; positive response received with indicative support of approximately 23.3 per cent. of Ordinary Shares held by Independent Shareholders
· Brickington Trading Limited, Playtech’s largest shareholder, agrees to 12 month lock-up in respect of its Ordinary Shares
Overview of TradeFX
· Profitable and growing online CFDs and binary options broker and trading platform provider, providing services in more than 100 countries and in over 25 languages, with both B2C and B2B offerings. Its principal B2C brand is markets.com
· Founded in 2009, employing over 500 staff globally, with offices in five countries
· Proprietary technology and CRM capabilities focused on increasing customer conversion rates and maximising customer lifetime value
· Established platform in a dynamic and fragmented growth market, with similar characteristics to the gambling industry, providing access to a broad range of consolidation opportunities
· 2014 EBITDA of $34.9 million with high cash conversion and group margin of approximately 40 per cent
Commenting on the Transaction, Mor Weizer, Chief Executive Officer of Playtech, said: “I am delighted to announce the proposed acquisition of TradeFX which provides entry into a highly complementary new market vertical where our combined operational superiority will enable exciting growth opportunities.”
“In addition to being immediately and significantly earnings enhancing, the payment terms for the acquisition are weighted towards future financial performance of the business. TradeFX’s proven management team has a strong cultural fit with our business and is incentivised to stay with the enlarged Group. We look forward to working with them to create additional shareholder value”
“The acquisition adds weight to the strong momentum with which we have started the year and which has continued throughout the first quarter. Following the acquisition, Playtech will retain significant resources to continue to pursue further acquisition opportunities. We will provide a further update on trading performance in our quarterly trading update which will be announced later this month” concluded Mr. Weizer.
For the official announcement from Playtech, click here.