Playtech Acquires Markets.com (TradeFX) for up to €458 Million

Playtech, the gaming software giant run by Tedi Sagi, is officially entering the forex market through its acquisition of TradeFX Limited in a deal worth up to €458 million for a controlling 91.1% stake. TradeFX is the ownership entity behind the Markets.com brand and its underlying technology. Initially launched as GFC Markets and later rebranded to Markets.com, the group was backed by Tedi Sagi and was his main venture into the forex industry. Telesphere, a subsidiary of Sagi’s benefit trust, currently holds 86.45% of TradeFX.

The acquisition occurs as Playtech has begun to get involved with providing technology to the trading industry with the release of a binary options trading platform, later named Keystone and marketed through Markets.com.

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Playtech believes the deal will become immediately accretive to their earnings

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Terms of the deal are an initial cash payment of €208 million with up to an additional €250 million paid by December 2017, based on the future EBITDA considerations. At €208 million, Playtech is paying 8.1 times EBITDA for Markets.com. Playtech believes the deal will become immediately accretive to their earnings.  Shareholder voting to approve the deal will take place later this month with a potential date of May 31st to complete the acquisition. Following the completion of the acquisition, current TradeFX management are expected to continue operating the company.

The deal came as TradeFX reported $27.6 million in Q1 revenues, marking 87% year-over- year growth, with $12.3 million in EBITDA. During the quarter they had 23,900 active customers and 10,800 in first time deposits.

Since launching as a forex and CFD broker in 2009, TradeFX has grown to include various trading brands, headed by Markets.com and TopOption, as well as operating forex and binary trading technology and a proprietary CRM system. Their latest release was the launch of a proprietary webtrader at the end of 2014.

Prior to today’s announcement, Markets.com has been considered to be an IPO candidate, similar to other Sagi backed assets such as Safecharge. The acquisition though, follows a separate model which Sagi has used which has been to back separate entities and eventually sell them to larger companies that he has an interest in, such as PT Turnkey Services in 2008, where Sagi earned €140 million at the time of the deal.