Gaming software provider Playtech (PTEC) has pulled out of its £460 million takeover of contracts-for-difference broker Plus500 (PLUS:AIM) over concerns it won’t be able to secure UK regulatory approval by the end of 2015.
A deal to buy Ava Trade has also fallen through. Playtech will not get back a $5 million deposit paid upon the original agreement.
We warned in October that the deals looked to be in jeopardy and today’s news sends the shares down 10.8% to 759.5p.
It’s a disappointing development for Playtech but we think the shares are still attractive given its strong position in the gambling sector and the high likelihood of there being other acquisition opportunities.
Playtech says trading remains strong with continued double-digit underlying growth and a strong pipeline of opportunities.
Canaccord Genuity has reduced its 2015 EBITDA (earnings before interest, tax, depreciation and amortisation) forecast from €256.5 million to €245.1 million, reducing earnings per share from 63.3c to 60.2c.
It says the absence of the deals means Playtech will now have net cash of around €995 million at the year end, with scope for value-accretive deals or returns of cash to shareholders.
Canaccord Genuity has cut its target price from £10.65 to £10.00 and kept its ‘buy’ rating.