It appears that early May reports by Finance Magnates about Playtech buying AvaTrade have had substantial merit. The deal is now closed, valuing the forex and CFDs brokerage at $105 million. The news comes after the media reports about the negotiations were dismissed in May.
Teddy Sagi is continuing his quiet venture deeper into the retail forex market and steering gaming company Playtech into a new direction. Mr. Sagi is Playtech’s biggest shareholder controlling about one third of the company’s share capital. So far his conquest into the retail foreign exchange market appears to be continuing without many hurdles.
This may yet change as a shareholders’ vote on Playtech’s purchase of Plus500 is looming on the 16th of July.
AvaTrade’s EBITDA for 2014 totaled $24.6 million
The acquisition deal was speculated at around $100 million back in May, with some estimating the revenues of AvaTrade at about $20 million for 2014. It appears that these estimations have been mostly correct with the purchase price standing at $105 million.
According to data from the Finance Magnates Quarterly report, AvaTrade reported its trading volumes at close to $40 billion a month, or on average $1.9 billion daily in the first quarter of 2015. The deal would build a solid base for the forex business of Playtech especially after having acquired TradeFX Group earlier this year.
Playtech is using its TradeFX Limited subsidiary to finalize the deal, which as it turns out is an option exercise to purchase the company. The option was purchased before Playtech acquired TradeFX.
The acquisition is conditional on the approval from Playtech’s shareholders and financial regulators.
Playtech also announced that it has secured a €200 million credit line from Barclays and Royal Bank of Scotland. The funds are going to be used to realize the company’s recent acquisitions.
Commenting on the announcement, the CEO of Playtech, Mor Weizer, said, “The acquisition of Ava Group is another important milestone in Playtech’s strategy to expand and enhance its overall technology offering through multiple vertical markets.”
Playtech continues to look for acquisitions, considering a multiple of about 6x adjusted 2014 EBITDA
“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,” he added.
Playtech has shared in its official announcement that it intends to continue looking for attractive acquisition targets in the area and highlighted that it considers an attractive multiple of approximately 6x adjusted 2014 EBITDA. AvaTrade’s EBITDA for 2014 totaled $24.6 million.
Probably the most lucrative part of the acquisition is AvaTrade’s Japanese Financial Services Agency’s license, which is opening doors for Playtech to venture into the biggest retail foreign exchange markets in the world by volume. The average number of active AvaTrade customers for the first five months of 2015 totaled 13,400.