Odey branded as ‘opportunistic’ Playtech’s offer for the trading platform and is refusing to back the deal.
Over the last 10 months Odey's hedge fund built its stake in the Haifa, Israel-headquartered firm from 12.9% to 25.5%, largely paying prices at or above the current offer price.
Playtech hit back claiming the deal represents good value to shareholders.
'We believe Odey Asset Management's arguments to be weak and not categorical,' the company said in an emailed statement.
'Our 400p a share offer remains compelling for Plus500 shareholders as it offers a clean cash exit at a significant premium to both the initial issue price and prevailing market value prior to our proposed offer.
'Playtech intends to address the challenges Plus500 faces as a result of its rapid expansion and regulatory failings.'
Now a battle is on the cards to see if Odey can persuade other shareholders to block the deal or attract a better offer.
‘We believe 400p per Plus500 share to be an opportunistic bid exploiting current regulatory issues and risks,’ Odey Asset Management says in a statement.
‘In our view, 400p materially undervalues Plus500 and we do not intend to vote in favour of the cash acquisition of Plus500 at this price.’
Traders are unconvinced Odey will be able to secure a better deal, with Plus500 shares little changed at 372p.
Plus500 co-founder Alan Gonen said as recently as December he believed the business to be worth $1-2 billion (£648 million-£1.3 billion), which translates to 564p-£11.28 per share, as previously reported in Shares.
That was before the trading platform revealed it needed to implement more onerous compliance checks on new and existing clients.
In an interview with Israeli business website Globes Gonen said his goal was to build Plus500 ‘into a much bigger company’.
‘Let’s assume that I sell Plus500 and start a new company. I’ll have to spend four to five years, and maybe I’ll be able to bring its value up to $20-40 million, and if I own half its capital, I’ll get $10 million to $20 million.
‘On the other hand, If I spend all my time at Plus500 – I still own 17% of it – and within five years I bring it to a value of $1 billion or £2 billion, which is quite realistic, I will earn almost $200 million.
‘I’d have to be stupid not to choose that option.’
Shares in the controversial contracts-for-difference provider slumped 36% on 18 May when it said it was facing regulatory issues in its UK-regulated subsidiary, paving the way for Playtech’s bid on 1 June.