Time to develop some software

Playtech’s GBP 460 million purchase of Plus500 will prove to be beneficial for both companies.

Seems like nowadays, Playtech is looking to fill its shopping cart like it’s Black Friday. The most recent purchase of the company established by Israeli mogul Teddy Sagi was the acquisition of forex trading company Plus500. What an exciting gambling industry development! Playtech’s newest addition cost the company a massive GBP 460 million (cash), but the future collaboration is predicted to be fruitful not only for Plus500, but for online gambling and betting software company, too. Not even two months have passed since the Playtech’s last part-purchase, TradeFX.

Playtech brought 91.1% of TradeFX (also owned by Teddy Sagi,) a site for the online trade of Contracts for Difference and Binary Options for EUR 208 million. Now, they offered 400 pence per Plus500 share. It was a quick deal, too: according to MorWeizel, CEO of Playtech, the contract was drawn up and signed within a week. The core reason of this acquisition is none other than to broaden the scope from online gambling and tackle other areas of the market.
And it is understandable: there is so much ground to cover and so many instances of untapped potential. If one has the means to do it, why not go ahead?

Playtech’s marketing, product and customer service strategies will be utilized to a great extent

As Mor Weizel, CEO of Playtech said to Financial Times, “As an immediately earnings enhancing acquisition, the combination of the two businesses is compelling, enabling us to apply our market-leading products and services to the enlarged financial trading business as we continue to execute our growth strategy for the group.” Concentrating on something other than gambling software could mean a diversification in the company that is unprecedented. Once the deal goes through, a vast number of traders will be added to Playtech. And, on the plus side for the management at Plus500, the senior officers will be kept on for a year.

Mor Weizer (Photo: Playtech)

According to the Financial Times, the specifics of this deal will mean that a 35% to 40% of Playetch business will emerge out of trading, whose number will move around 150,000. The CEO of Playtech stated that online trading is growing faster than online gambling at the moment. Thus, it will definitely not hurt the company to have a little something-something on the side. Another strategic outlook for the company could mean the potential of these 150,000 traders to start gambling with Binary Options. This is a territory that is bound to have room to grow.

Playtech wants to spend EUR 100 more in the future

Playtech still has some money to spend, so it is looking for ways to further expand into the trading world. When the gambling software developers bought Plus500, the company was in a pickle: due to an upcoming UK Financial Conduct Authorityreview of the company’s anti-moneylaundering procedures, there was a downfall in CFD broker share values. Because of the upcoming review, Plus500 had to cease the transactions of all existing customers and refused to take on new ones. An underlying reason as to why the value of Playtech shares dropped.Playtech, however, remains positive on the matter.

They stated to the Financial Times, “[Plus500’s] products, technology and marketing skills remain strong, the recent regulatory scrutiny placed on Plus500 has highlighted the advantages of expanding the operational infrastructure.” The CEO of Playtech added that the company expects that issues with the UK’s Financial Conduct Authority will soon be settled. And once that is done, the sky is the limit for the newly merged companies. They plan on keeping the profile of most acquisitions (as in the case of Plus500,) so the best of each company can be preserved and developed. As the CEO said, “This is not about cost synergies but about revenue synergies and combining the best of both.”