Playtech is pleased to announce that its subsidiary, TradeFX Limited ("TradeFX"), has entered into a share acquisition agreement under the terms of which it will acquire the entire issued share capital of Ava Trade
, an online B2C CFD broker over which TradeFX had secured an option to purchase prior to the acquisition of TradeFX by the Playtech Group.
The consideration payable to the Sellers under the terms of the Transaction is US$105 million, which is subject to a post-Completion working capital calculation on a cash-free/debt-free basis. Completion of the Transaction is conditional on approval from Playtech's shareholders and relevant financial services regulators.
In addition, Playtech is pleased to announce that it has agreed a €200 million unsecured revolving credit facility with Barclays Bank PLC and Royal Bank of Scotland plc, which will, together with existing cash resources, be available to fund the recently announced acquisitions of the Playtech Group and also further growth initiatives.
- Acquisition of a complementary business to build upon the TradeFX acquisition
- The Transaction will substantially expand and enhance TradeFX's existing position through the diversification of customers and geographies with limited overlap with TradeFX's business together with the addition of new regulatory licences
- Directly in line with Playtech's strategy to acquire profitable, regulated, highly cash generative businesses with market-leading positions
- Consideration at attractive multiple of approximately 6x adjusted 2014 EBITDA*
- Expected opportunities for synergies identified as part of integration planning
- Acquisition is classified as a Class 1 transaction due to aggregation with the TradeFX acquisition
- Brickington Trading Limited, Playtech's largest Shareholder, has undertaken to vote in favour of the Transaction in respect of its 33.6 per cent beneficial holding
* adjusted to take into account certain jurisdictions which may be closed or discontinued in their current form
Overview of Ava Trade
- Award-winning, profitable and growing B2C online CFD broker, providing services in more than 160 countries and in over 16 languages
- Established in 2006 and headquartered in Dublin, Ireland
- Licensed and regulated in the EU by the Central Bank of Ireland, in the BVI by the British Virgin Islands' Financial Services Commission, in Japan by the Financial Services Agency and in Australia by the Australian Securities and Investments Commission
- Average Active Customers for five months to 31 May 2015 of 13,400
- Reported 2014 revenue of $69.9 million, with EBITDA of $24.6 million (pre any adjustments for jurisdictions which may be closed or discontinued in their current form).
Commenting on the Transaction, Mor Weizer, Chief Executive Officer of Playtech, said:
"The acquisition of the Ava Group is another important milestone in Playtech's strategy to expand and enhance its overall technology offering through multiple vertical markets. Since the recent earnings-enhancing acquisition of TradeFX and the creation of our financials division we have sought further opportunities to broaden our reach into this vertical.
The Ava Group is a well recognised and established online CFD broker with multiple regulatory licences and a strong customer base with insignificant geographical overlap with the TradeFX Group. We are very excited about the opportunities for the Group arising from the combination of the Trade FX Group and the Ava Group which we are confident will deliver long term value for Shareholders."
Canaccord Genuity is acting as sole sponsor and financial adviser to the Company in connection with the Transaction.
Current trading and prospects
Playtech and TradeFX
Playtech's core gambling business continues to perform strongly with average daily run rate revenue for Q2 2015 up over 25 per cent. on Q2 2014.
From 1 January 2015 to 31 May 2015, TradeFX continued to benefit from the execution of its strategy, including the growth in popularity of the mobile application and the effectiveness of its approach to marketing, generating improved performance in its key business metrics of Active Customers and FTDs.
From 1 January 2015 to 31 May 2015, the Ava Group continued to experience the positive momentum from 2014, with total revenues of approximately $26.3 million, representing growth of 34 per cent. over the same period in 2014, driven by concentrating on geographically diverse retail traders. Over the same period, average monthly active customers and FTDs declined as the Ava Group executed on its strategy of focusing on customers who will deliver greater longer term value for the group rather than shorter term volumes, resulting in a significant increase in customer lifetime value.
Background to and reasons for the Transaction
The Transaction is in line with the Board's strategy to acquire market leading businesses in regulated, high growth industries, with similar fundamentals to the Group's existing operations. The Board reviews the most efficient, value enhancing means for deploying its capital on an ongoing basis.
The Transaction builds on Playtech's recent acquisition of TradeFX, a leading online CFD and binary options broker and trading platform provider. The Directors believe the consideration to be an attractive valuation for the business, which will substantially expand and enhance the TradeFX Group's existing offering in a complementary way.
The Transaction will provide additional regulatory licences as well as to those already held, significantly increasing the number of geographies to which the Group offers its B2C services, with limited overlap between the customer locations of the TradeFX Group and those of the Ava Group.
Playtech is in the process of putting in place certain arrangements with the senior management team of the Ava Group, who have been instrumental in building the business and will remain with it following Completion. The founders of Ava's business have had a reduced involvement in the management of the business over recent years and accordingly following Completion will cease to be involved.
As announced on 1 June 2015, Playtech and Plus500 have reached agreement regarding the terms of a recommended cash acquisition by the Group of Plus500 which values the entire issued ordinary share capital of Plus500 at £459.6 million. This acquisition remains conditional on, inter alia, approval by both Playtech's Shareholders and the shareholders of Plus500. Should the acquisition of Plus500 proceed, the Directors believe that it will be complimentary to both TradeFX and AvaTrade, and will enable the combined offering to maximise the market opportunity and product offering by utilising the strengths of all three businesses. A circular relating to the acquisition of Plus500 will be sent to the Shareholders in due course.