Plus500 is being sold to online gaming company Playtech
The board of Israel-based but London-listed Plus500 announced the deal this morning in a regulatory news update.
The deal values Plus500 at £459.6 million, way below the £862.million Plus500 was valued at before the UK's financial watchdog ordered it to overhaul its anti-money laundering procedures two weeks ago. News of this regulatory scrutiny sent the company's share price tumbling.
Plus500 indicated that the sale is necessary to cope with the added pressure on the business since all this blew up, saying: "Plus500 has become the subject of increased scrutiny and has received additional requests for information from its regulators in the jurisdictions in which it is licensed.
"Whilst 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 to support a business of its size."
Plus500's board, who control 35% of shares, are all backing the deal. But the company will need to win approval from hedge fund giant Odey Asset Management, which has been pumping money into Plus500 throughout its share price fall and now owns 20% of the business.
Chief executive Gal Haber said in a statement: "We are very proud to have built Plus500 in a short time into a significant player in the CFD market. Having been admitted to AIM at a share price of 115p on 24 July 2013 and paid significant dividends during this time, we believe that now is the right time to combine the business with Playtech who can provide additional infrastructure and expertise to add to our core skills in products, technology and marketing."
Profit warning
Plus500 also used the announcement of this morning's sale to sneak out a pretty big profit warning. The company said it "now expects group revenue for 2015 to be lower than in 2014, with margins expected to be significantly lower due to maintained marketing spend".
Liberum's Cormac Leech, an analyst who covers Plus500, had forecast revenues of $280 million this year, compared to $228.9 million last year.
Plus500's management say the sale will help boost the business, saying is "expected to be immediately earnings enhancing."
Playtech, the business acquiring Plus500, built its name in gambling software, working with the likes of Ladbrokes and William Hill. The company is the brianchild of Israeli billionaire Teddy Sagi, who is currently buying up and transforming Camden Market through another company.
In April Playtech made its first venture into the trading market, buying TradeFX for €208 million. At the time Playtech's chief executive Moz Weizer told Reuters "The trading platform is complementary to gaming companies' operations."
Keep checking back. We'll update with more as we get it.