Playtech moves into financial trading with €458m acquisition of TradeFX

In its first move into the financial trading market, online gaming company Playtech has agreed to acquire forex and CFD provider company TradeFX, a company owned by Playtech's billionaire founder Teddy Sagi, for up to €458m (£335m).

Online casino, poker and sports-betting provider Playtech, in which Sagi holds a 33.6% stake, will pay an initial €208m (£152m) cash for a 91.1% stake in the binary options provider, which will "immediately and significantly" enhance earnings.

As part of the acquisition, FTSE 250-listed Playtech could also pay an potential earn-out payment of up to €250m based on the future performance of TradeFX.

Playtech said this was a "compelling opportunity" to enter a growing financial trading market that was complementary to its own business and "driven by similar core competencies".

TradeFX, whose principal consumer brand is markets.com, is reported to be at an "inflection point" in its business performance, with current annualised run-rate earnings before interest, tax, depreciation and amortisation (EBITDA) "significantly ahead" of last year's.

The experienced management team at TradeFX, which provides consumer and business-to-business (B2B) services in more than 100 countries and in over 25 languages, will remain with the business as part of the deal.

Shore Capital analyst Martin Brown said Playtech has a good track record on acquisitions and while this deal is a move out of its core gaming vertical, the technology and the core skills required are very similar.

He noted that a number independent shareholders have been approached already about the deal, with indicative support of approximately 23.3% of the ordinary shares held by independent shareholders, on top of Sagi's holding.

Simon French said at Cenkos said while there may be some disappointment that the company has taken recourse to another related party transaction, Sagi has "proved to be a good source of deal flow which have contributed strongly to Playtech's success for the benefit of all shareholders”.

Sagi's other interests on the London stock market have been busy of late, with Camden Market property and technology combine Market Tech snapping up some key real estate, while digital advertising group Crossrider last month cut its annual losses thanks to strong organic growth and acquisitions.

Last year's AIM flotation of his online payments processing vehicle Safecharge, has been followed by encouraging results in March as well.