Proposed acquisition of Plus500 by Playtech | RNS | Ticker

Proposed acquisition of Plus500 by Playtech

RNS Announcement

RNS Number : 7568O

Playtech PLC

01 June 2015

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

1 June 2015

Recommended cash acquisition of Plus500 Ltd by Playtech plc

The Boards of Playtech plc ("Playtech" or the" Playtech Group") and Plus500 Ltd ("Plus500" or the "Plus500 Group") are pleased to announce that they have reached agreement regarding the terms of a recommended cash acquisition through which the entire issued ordinary share capital of Plus500 will be acquired by Playtech (the "Acquisition").

Terms of the Acquisition

Under the terms of the Acquisition, Plus500 Shareholders will be entitled to receive 400 pence per Plus500 share in cash. The Acquisition values the entire issued ordinary share capital of Plus500 (the "Plus500 Shares") at approximately £459.6 million.

Background to the Acquisition

Playtech has a stated strategy to acquire profitable, regulated, highly cash generative businesses with market-leading positions.
Following the recent acquisition of TradeFX Limited ("TradeFX"), the online CFDs and binary options broker and trading platform provider, Playtech is a natural aggregator of businesses within this sector.
Plus500 has developed and operates an online trading platform for retail customers to trade CFDs internationally with more than 2,000 different underlying global financial instruments.
On 18 May 2015, Plus500 announced that the UK Financial Conduct Authority ("FCA") had required a review of its Anti-Money Laundering ("AML") financial sanction systems and other related regulatory controls which led to Plus500UK Limited ("Plus500UK") prohibiting all transactions for existing customers until additional AML procedures have been completed. As a result, Plus500UK ceased on-boarding new customers.
Further to this, recent events and associated publicity have meant that 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.
Playtech intends to provide Plus500 with access to its market leading technology and infrastructure, in combination with its expertise of operating a multi-jurisdictional regulated business.
Plus500's Board now expects group revenue for 2015 to be lower than in 2014, with margins expected to be significantly lower due to maintained marketing spend.

Strategic and financial rationale for the Acquisition

The Acquisition represents a unique opportunity due to Plus500's market reach, advanced technology, product offering and existing customer relationships globally, which allows it to successfully attract and convert customers.
The combination of Plus500 with Playtech's recently acquired TradeFX business will enable the combined business to maximise the market opportunity and product offering by utilising the strengths of both businesses.
Playtech intends to provide Plus500 with CRM capabilities and expertise to maximise customer life time value and improve its standalone financial performance.
Plus500's management have executed undertakings that they will remain with the business for a period of 12 months from completion of the Acquisition to secure a smooth transition to Playtech management.
The Acquisition is expected to be immediately earnings enhancing.

Expected timetable

The parties currently anticipate that the Acquisition will be completed by the end of September 2015, subject to regulatory approval.

Recommendations and approvals

The Plus500 Directors consider the financial terms of the Acquisition to be fair and reasonable. Accordingly, the Plus500 Directors intend to unanimously recommend that Plus500 Shareholders vote in favour of the Acquisition at a Plus500 General Meeting which will be convened in connection with the Acquisition. Alon Gonen, Gal Haber, Elad Ben Izhak, Shlomi Weizmann and Omer Elazari have undertaken to procure the vote in favour of the Acquisition in respect of their own beneficial holdings of 40,932,911 Plus500 Shares representing, in aggregate, approximately 35.6% of Plus500's issued share capital on 29 May 2015, being the last Business Day before the date of this Announcement. Liberum Capital Limited ("Liberum") has provided financial advice to the Plus500 Directors.
In order to proceed with the transaction, the Acquisition requires the approval of Plus500's Shareholders holding the majority of the Plus500 Shares at a General Meeting. Therefore, the Directors of Plus500 intend to send a circular in the form of an information statement ("Information Statement") to Plus500's Shareholders as soon as possible and within twelve days of this announcement, the purpose of which is to convene a General Meeting enabling Plus500 Shareholders to vote on the Acquisition.
It is intended that the Acquisition will be effected by means of a merger of Socialdrive Limited ("Socialdrive") a wholly owned subsidiary of Playtech into Plus500 in accordance with the provisions of Israeli Companies Law. The Acquisition is not governed by the City Code on Takeover and Mergers ("the UK Takeover Code").
The Acquisition will be put to the vote of Playtech Shareholders as a Class 1 transaction for Playtech for the purposes of the UK Listing Rules. The Playtech Directors consider the Acquisition to be in the best interests of Playtech and the Playtech Shareholders as a whole and intend to unanimously recommend that Playtech Shareholders vote in favour of the Acquisition at the Playtech General Meeting which will be convened in connection with the Acquisition.
Brickington Trading Limited, being the largest Playtech Shareholder, has undertaken to vote in favour of the Acquisition in respect of its own beneficial holding of 98,645,782 shares in Playtech representing approximately 33.6 per cent. of the ordinary share capital of Playtech in issue on 29 May 2015 being the last Business Day before the date of this Announcement.
The Playtech Directors have received financial advice from Canaccord Genuity Limited ("Canaccord Genuity") in relation to the Acquisition. In providing their advice to the Playtech Directors, Canaccord Genuity has relied upon the Playtech Directors' commercial assessment of the Acquisition.

Commenting on the Acquisition, Mor Weizer, Chief Executive Officer of Playtech said:

"Having recently completed the acquisition of TradeFX, the opportunity to acquire Plus500 will prove transformational for our ambitions to expand Playtech's wider offering. As an immediately earnings enhancing acquisition, the combination of the two businesses is compelling, enabling us to apply our market-leading products and services to the enlarged financial trading business as we continue to execute our growth strategy for the Group."

Commenting on the Acquisition, Gal Haber, Chief Executive Officer of Plus500 said:

"We are very proud to have built Plus500 in a short time into a significant player in the CFD market. Havingbeen 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."

- Ends -

Conference call

Mor Weizer, Chief Executive Officer of Playtech and Ron Hoffman, Chief Financial Officer of Playtech, will host a conference call today at 8:30am. Details of the conference call are as follows:

Dial-in no. UK: +44 (0)20 3427 1918

Dial-in no. Israel: +9723763 0145

Conference ID: 7396893

Replay (available for one week)

Dial-in no: +44 (0)20 3427 0598

Conference reference number: 7396893

An audio file will be also available on the Playtech website following the conference call.

For further information please contact:

Playtech PLC (C/O Bell Pottinger) +44 (0) 20 3772 2496

Mor Weizer, Chief Executive Officer

Ron Hoffman, Chief Financial Officer

Andrew Smith, Head of Investor Relations

Canaccord Genuity Limited +44 (0) 20 7523 8000

(Financial adviser, Sponsor and broker to Playtech)

Bruce Garrow

Piers Coombs

Cara Griffiths

Bell Pottinger +44 (0) 20 3772 2496

David Rydell

Olly Scott

David Bass

James Newman

Plus500 Ltd +972 4 8189503

Elad Even-Chen, Finance Director, VP Business Development and Head of Investor Relations

[email protected]

Liberum Capital Limited +44 (0) 20 3100 2222

(Financial adviser. Nominated adviser and broker to Plus500)

Clayton Bush

Christopher Britton

Josh Hughes

MHP Communications +44 (0) 20 3128 8100

Reg Hoare

Tim Rowntree

Adam Leviton

The statements contained in this Announcement are made as at the date of this Announcement, unless some other time is specified in relation to them, and publication of this Announcement shall not give rise to any implication that there has been no change in the facts set forth in this Announcement since such date. Nothing contained in this Announcement shall be deemed to be a forecast, projection or estimate of the future financial performance of Playtech or the Playtech Group or Plus500 or the Plus500 Group except where otherwise stated.

IMPORTANT NOTICE:

Canaccord Genuity, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser, Sponsor and broker for Playtech and no one else in connection with the Acquisition and other matters referred to in this Announcement and will not be responsible to any person other than Playtech for providing the protections afforded to clients of Canaccord Genuity nor for giving advice in relation to the Acquisition or any other matter or arrangement referred to in this Announcement.

Liberum, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as Nominated adviser and broker to Plus500 and no one else in connection with the Acquisition and other matters referred to in this Announcement and will not be responsible to any person other than Plus500 for providing the protections afforded to clients of Liberum nor for giving advice in relation to the Acquisition or any other matter or arrangement referred to in this Announcement.

Further information:

This Announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the Acquisition or otherwise. The Acquisition will be made solely by means of an Information Statement to be sent to the Plus500 Shareholders, which will contain the full terms and conditions of the Acquisition, including details of how the Acquisition can be approved.

Playtech accepts no responsibility for the information contained in this announcement that relates to Plus500 and any member of the Plus500 Group and the recommendation of the Plus500 Directors in relation to the Acquisition. Plus500 accepts no responsibility for the information contained in this announcement other than that which relates to Plus500 and any member of the Plus500 Group and the recommendation of the Plus500 Directors in relation to the Acquisition.

Overseas jurisdictions:

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to the laws of other jurisdictions should inform themselves of, and observe, any applicable requirements. Any failure to comply with these restrictions may constitute a violation of securities laws of any such jurisdictions. To the fullest extent permitted by law, Playtech and Plus500 disclaim any responsibility or liability for the violation of such restrictions by such person.

Persons who are residents in the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction.

Cautionary note regarding forward looking statements:

This Announcement contains certain forward looking statements with respect to the financial condition, results of operations and businesses of Playtech and Plus500 and their respective Groups, and certain plans and objectives of Playtech. All statements other than statements of historical fact are, or may be deemed to be, forward looking statements. Forward looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward looking statements include, among other things, statements concerning the potential exposure of Playtech and Plus500 to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions, including as to future potential cost savings, synergies, earnings, cash flow, return on average capital employed, production and prospects. These forward looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases.

Each forward looking statement speaks only as of the date of this Announcement. None of Playtech, the Playtech Group, Plus500 or the Plus500 Group undertakes any obligation to publicly update or revise any forward looking statement as a result of new information, future events or otherwise, except to the extent legally required. In light of these risks, results could differ materially from those stated, implied or inferred from the forward looking statements contained in this Announcement.

Rounding:

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

1 June 2015

Recommended cash acquisition of Plus500 Ltd by Playtech plc

1. Introduction

The Boards of Playtech and Plus500 are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of the entire issued ordinary share capital of Plus500 by Playtech, such Acquisition to be made by Brighttech Investments S.A. ("Brighttech"). Under the terms of the Acquisition, Plus500 Shareholders will be entitled to receive 400 pence in cash per Plus500 Share, valuing the Plus500 Group at approximately £459.6 million.

2. The Acquisition

Under the terms of the Acquisition, which will be set out in further detail in both the Information Statement to be sent to Plus500 Shareholders and the Circular to be posted to Playtech Shareholders, Plus500 Shareholders shall be entitled to receive 400 pence per Plus500 Share in cash, without any interest thereon, subject to the withholding of any applicable taxes as described below.

Playtech expects to fund the Acquisition from existing cash resources and new debt facilities.

The Acquisition will be implemented by means of a merger in accordance with the Israeli Companies Law through the reverse merger of Socialdrive, an Israeli subsidiary of Brighttech, with and into Plus500 with Plus500 surviving such merger as a wholly owned subsidiary of Playtech. The Acquisition is not governed by the UK Takeover Code.

Structure

To effect the Acquisition, Brighttech (a wholly owned subsidiary of Playtech), Socialdrive and Plus500 have today entered into the Merger Agreement pursuant to the terms of which the total consideration to be paid for all issued and outstanding shares of Plus500 on completion of the Acquisition will be £459,553,508, which represents 400 pence per Plus500 Share (excluding any payment made in relation to any share appreciation rights outstanding at the time of completion, which would be paid out in cash at that time by Plus500 in accordance with the provisions of the Merger Agreement).

Conditions

Completion of the Acquisition is subject to the satisfaction or waiver of a number of conditions set out in the Merger Agreement including:

· the approval of Plus500's Shareholders for the Acquisition;

· the approval of Playtech's Shareholders for the Acquisition;

· there being no event having a Material Adverse Effect (as defined in the Merger Agreement) prior to completion of the Acquisition;

· regulatory approval for the Acquisition being received from and/or the appropriate notifications being made to the applicable regulators which would include the FCA in the UK, the Australian Securities and Investment Commission (ASIC) in Australia and Cyprus Securities and Exchange Commission (CySEC) in Cyprus in respect of the Plus500 Group's various regulatory licences; and

· the Israeli statutory waiting periods having elapsed following the filing of the relevant merger proposals with the Israeli Registrar of Companies.

Conduct of business by Plus500; no dividend distribution

Plus500 has agreed that until the effective date of the Acquisition, Plus500 and its subsidiaries will conduct their businesses in the ordinary course of business consistent with past practice and use commercially reasonable efforts to preserve substantially intact their business organisation, keep available the services of the current officers and key employees, and preserve the current relationships with customers, suppliers, distributors and other persons with whom Plus500 or its subsidiaries have significant business relations, subject to certain exceptions.

The Merger Agreement prohibits Plus500 from distributing dividends to its shareholders until the effective date of the Acquisition without the prior consent of Brighttech.

Competing proposals

Plus500 has agreed that it will and will cause its subsidiaries and their respective representatives to immediately cease any and all existing discussions, communications or negotiations with respect to any acquisition proposal with any persons conducted prior to the execution of the Merger Agreement and refrain from any discussions, communications or negotiations with respect to any acquisition proposal for so long as the Merger Agreement is in effect.

Notwithstanding the restrictions above in relation to the conduct of business, the Plus500 Board is permitted to engage in discussions of, or provide non-public information with respect to, any bona fide, unsolicited written acquisition proposal received without a breach of the "no solicitation" restrictions contained in the Merger Agreement if the Plus500 Board has determined, after consultation with its financial adviser and outside legal counsel, that the acquisition proposal constitutes or may reasonably be expected to lead to a "superior proposal". A "superior proposal" is a proposal in cash where the consideration payable thereunder to the Plus500 Shareholders is not less than 105% of the consideration offered by Brighttech under the terms of the Acquisition (or any amended terms of the Acquisition put forward by Brighttech). In the event of a superior proposal, the Plus500 Board may change its recommendation to the Plus500 Shareholders and/or terminate the Merger Agreement, subject to the right of Brighttech to match the superior proposal and the requirement for Plus500 to pay a termination fee in certain cases (as described below).

Break fee

The Merger Agreement contains representations and warranties given by each of Plus500, Brighttech and Socialdrive and also provides for a break fee of £20.7 million (4.5 per cent. of the value of the Acquisition) to be paid by Plus500 to Brighttech in the following circumstances

· (A) a takeover proposal shall have been made known to Plus500 and publicly disclosed or made publicly known or made directly to the Plus500 Shareholders, and thereafter, the Merger Agreement is terminated by Plus500 or Playtech due to the failure to obtain the Plus500 Shareholders approval, and thereafter (B) within nine months after the date the Merger Agreement is terminated, Plus500 enters into a definitive agreement with respect to any takeover proposal that is subsequently consummated;

· Plus500 terminates the Merger Agreement in order to enter into an agreement with respect to a superior proposal; or

Plus500 terminates the Merger Agreement due to (A) the Plus500 Board changes its recommendation to the shareholders to vote for the Merger; or (ii) the Plus500 Board refuses to re-affirm its recommendation to vote for the Acquisition and, within nine months after such date, Plus500 enters into a definitive agreement with respect to any takeover proposal that is subsequently consummated.

Termination

The Merger Agreement may be terminated at any time before the effective time of the Acquisition by the mutual written consent of Brighttech, Socialdrive and Plus500.

The Merger Agreement may also be terminated prior to the effective time of the Acquisition by Brighttech or Plus500 if:

· a governmental entity has issued a final and non-appealable order or taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Acquisition;

· the Acquisition is not consummated by 31 December 2015 (it being agreed that such rights cannot be exercised by a party whose actions or omissions have been a principal cause of the failure to meet such date); or

· the Plus500 Shareholder approval or the Playtech Shareholder approval is not obtained at the relevant meeting.

The Merger Agreement may also be terminated by Brighttech under any of the following circumstances:

· if (A) the Plus500 Board changes its recommendation to shareholders to vote in favour of the Acquisition following receipt of a superior proposal or (B) following the public disclosure or announcement of a takeover proposal the Plus500 Board shall have failed to reconfirm publicly the Plus500 Board recommendation within seven business days after Plus500 receives Brighttech's written request therefor;

· Plus500 has materially breached any of its representations, warranties or covenants under the Merger Agreement which would result in the failure to satisfy a closing condition (subject to an overall material adverse effect qualification), and Plus500 has failed to cure or cannot cure the breach within 30 days following notice of the breach.

The Merger Agreement may also be terminated by Plus500 under any of the following circumstances:

at any time prior to the receipt of the Plus500 Shareholders approval in order to enter into an agreement with respect to a superior proposal, provided that Plus500 pays the break fee (as described above) to Brighttech concurrently with the termination of the Merger Agreement;
Brighttech has materially breached any of its representations, warranties or covenants under the Merger Agreement which would result in the failure to satisfy a closing condition (subject to an overall material adverse effect qualification), and Brighttech has failed to cure or cannot cure the breach within 30 days following notice of the breach; or
if (A) the conditions to closing have been satisfied (or waived), (B) Plus500 has irrevocably confirmed in a written notice delivered to Brighttech that Plus500 stands, and will stand, ready, willing and able to consummate the Acquisition and (C) Brighttech fails to consummate the Acquisition within five business days after the delivery of such written notice.

Further details of the terms and conditions of the Merger Agreement will be set out in the Playtech Circular and the Plus500 Information Statement.

3. Background to and reasons for the Acquisition

The Acquisition is in line with Playtech's stated strategy to acquire market leading businesses in regulated, high growth industries, with similar fundamentals to Playtech's existing operations. The Board of Playtech reviews the most efficient, value enhancing means for deploying its capital on an ongoing basis. The Playtech Directors believe that the acquisition of Plus500 represents an attractive opportunity due to its brand, its position in the market and its existing customer relationships globally. Furthermore, Playtech's Directors believe that the Acquisition, if approved, represents a fair valuation for a leading CFD broker and platform provider.

The transaction builds upon Playtech's recent acquisition of a 91.1% stake in TradeFX, the online CFDs and binary options broker and trading platform provider, and the Directors of Playtech and Plus500 believe that there is strong potential for synergies through the combination of Plus500 and TradeFX, as well as the opportunity to continue to grow through further consolidation in the industry.

In statements made by Plus500 on 18 May 2015 and 22 May 2015, it notified that:

On 30 October 2014, Plus500UK provided a Voluntary Requirement ("VREQ") to the FCA whereby Plus500UK was prohibited from conducting all transactions for customers without appropriate AML documentation;
On 9 January 2015, Plus500UK was required by the FCA to appoint a skilled person to conduct a review of its Anti-Money Laundering ("AML"), financial sanction systems and other related regulatory controls;
On 18 May 2015, Plus500UK prohibited all transactions for existing customers until additional AML procedures have been completed and ceased on-boarding any new clients until procedures are agreed with the skilled person, which they estimated to be concluded within days.

On 27 May 2015, Plus500 estimated that in the two weeks since this disclosure, revenue had reduced by US$4 million and that it would incur additional one off remediation costs conservatively estimated to be US$2 million. In addition, Plus500 remains in an active dialogue with the skilled person regarding the modifications to its on-boarding processes for new customers and until this has come to a conclusion, Plus500 estimates it will be unable to on-board any new customer accounts through its FCA regulated subsidiary. This is expected to take about a month.

4. The Playtech Group's strategy

The Acquisition will provide Playtech with additional regulatory licences in the UK (FCA) and Australia (ASIC) and will further enhance the licences already held by Playtech.

The Acquisition will also support Playtech's current strategy of building and acquiring highly cash generative, scalable businesses, which is driven through delivering industry leading technology and marketing capabilities across multiple digital channels.

As a result of this transaction and as the financial vertical of the Playtech Group continues to grow and become more significant to the overall performance of the enlarged group, the board of Playtech has decided that Ron Hoffman will take on the role of CEO of TradeFX, whilst retaining his role as CFO of the Playtech Group.

5. Information on Playtech

Playtech develops unified software platforms and content for the online and land-based gaming industry, together with providing a range of ancillary services such as marketing, CRM services and hosting.

The Playtech Group's capabilities enable the delivery of an integrated software or turnkey solution, with players accessing online, broadcast, mobile and server-based gaming terminals through a single account.

New licensees include existing online operators upgrading or diversifying their offering, land-based casino groups, government sponsored entities such as lotteries, and new entrants making their online gaming debut, particularly in newly-regulated markets.

Founded in 1999, Playtech is listed on the London Stock Exchange under the ticker LSE:PTEC and has approximately 5,000 employees located in thirteen countries. Its leading gaming applications include casino, bingo, poker, sports betting, live, mobile and social gaming, casual and fixed odds games, as well as those applications offered by TradeFX.

6. Information relating to Plus500

Plus500, which is listed on AIM under the ticker AIM:PLUS, has developed and operates an online trading platform for retail customers to trade CFDs internationally over more than 2000 different underlying global financial instruments comprising equities, ETFs, foreign exchange, indices and commodities. Plus500 enables retail customers to trade CFDs in more than 50 countries. The trading platform is accessible from multiple operating systems (Windows, smartphones (iOS, Android and Windows Phone) and tablets (iOS, Android and Surface)) and web browsers. Plus500's proprietary trading platform has been designed to be as intuitive and easy to use as possible and has been localised into over 31 languages.

Plus500 reported total revenue for the year ended 31 December 2014 of $228.9 million, representing an increase of 99% on the previous year, with 94% of Plus500's total revenue being derived from Regulated Markets. Plus500's EBITDA margin for the same period increased to 63.6%, whilst EBITDA increased 116% to $145.4 million. For the year ended 31 December 2014, Plus500 generated a pre-tax profit of $138.1 million. As at 31 December 2014, Plus500 reported total gross assets of $146.3 million.

7. Plus500 management and employees

Playtech attaches importance to the skills, experience and industry knowledge of the existing management and employees of Plus500. Playtech cannot be certain as to what, if any, repercussions there will be on employment, the locations of Plus500's or Playtech's places of business or any redeployment of their fixed assets. Playtech intends, conditional upon the Acquisition completing, to carry out a strategic review of the combined businesses and operations. Playtech's strategic review may result in the combination of elements of the respective businesses in order to capitalise on the benefits of co-ordination as soon as possible after completion of the Acquisition and currently expects that the review will be completed within six months. The Playtech Directors cannot exclude the possibility that changes will take place during the period of the strategic review. The Playtech Directors confirm that, upon the acquisition completing, the existing employment rights of all Plus500 Group employees will continue to be fully safeguarded and their accrued rights to pension benefits protected.

8. Recommendation by the Plus500 Directors

The Plus500 Directors consider the terms of the Acquisition to be fair and reasonable and accordingly, unanimously recommend that Plus500 Shareholders vote in favour of the Acquisition at the general meeting of Plus500 shareholders which will be convened in respect of the Acquisition. In anticipation of such general meeting, Alon Gonen, Gal Haber, Elad Ben Izhak, Shlomi Weizmann and Omer Elazari, being the Plus500 founders who hold Plus500 Shares, have undertaken to procure the vote in favour of the Acquisition in respect of their own beneficial holdings of 40,932,911 shares, representing in aggregate, approximately 35.6 per cent. of the ordinary share capital of Plus500 in issue on 29 May 2015 being the last Business Day before the date of this Announcement.

9. Background to and reasons for the Plus500 Directors' recommendation

In recent months, 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, particularly around the group's internal client on-boarding processes, which has caused significant disruption to the group's operations. Such scrutiny has made it apparent that Plus500 has underestimated the challenges brought about by its rapid growth and would therefore benefit from being part of the Playtech Group.

The Plus500 Directors have assessed the benefits of maintaining an independent AIM listing, and the potential future growth in equity value for investors, against the certainty for Plus500 Shareholders of realising value at a cash premium to the recent share price that is not currently available in the market.

The Plus500 Directors have therefore concluded that Plus500 Shareholders' best interests are served by the Acquisition. Liberum has provided financial advice to the Plus500 Directors. The Plus500 Directors also believe that the advantages that can be achieved through being part of a larger organisation will provide further benefits to employees and customers of Plus500. As such the Plus500 Directors intend to unanimously recommend that Plus500 Shareholders vote in favour of the Acquisition at the general meeting of Plus500 Shareholders.

10. Recommendation by the Playtech Directors

The Playtech Directors unanimously approved the Acquisition and recommend that Playtech Shareholders vote in favour of the Acquisition at the general meeting of Playtech Shareholders which will be convened in respect of the Acquisition.

In anticipation of such general meeting, Brickington Trading Limited, being the largest Playtech Shareholder, has undertaken to vote in favour of the Acquisition in respect of its own beneficial holding of 98,645,782 shares in Playtech, representing approximately 33.6 per cent. of the ordinary share capital of Playtech in issue on 29 May 2015 being the last Business Day before the date of this Announcement.

11. Current trading and prospects of Plus500

Recent events and associated publicity have meant that Plus500 has become the subject of increased scrutiny and has received further requests for information from its regulators in the jurisdictions in which it is licensed.

Plus500UK continues to make progress in effecting its remediation plan. Its estimates of the time required remain unchanged, both for re-approving existing customers' documentation and for implementing the modifications to on-boarding processes for new customers.

The Plus500 Board has reassessed its own expectations for full year financial performance. Its current expectation is that Plus500 Group revenue in 2015 will be slightly lower than in 2014. The Plus500 Board has concluded that it is in the interests of the Plus500 Group to continue its substantial marketing spend in order to maintain its customer base, which will lead to a significantly lower margin in 2015 than in 2014, but is consistent with a return to good revenue growth in 2016.

12. Taxation

The receipt of cash by Plus500 Shareholders in exchange for the Plus500 Shares pursuant to the Merger Agreement will be a taxable transaction for Israeli tax purposes at a rate of 30 per cent. However, non-Israeli resident shareholders are generally exempt from Israeli capital gains tax on any gains derived from the disposition of their shares, provided that such gains are not derived from a permanent establishment of such shareholders in Israel.

Plus500 intends to file with the Israeli Tax Authority, promptly following this Announcement, an application for a ruling that provides that no Israeli withholding tax is applicable to a Plus500 Shareholder who certifies that it is a non-Israeli resident and has no connection to Israel as set forth in the ruling. If such a ruling is granted, no Israeli tax shall be withheld from any non-Israeli resident that complies with the tax ruling requirements. Plus500 intends to provide updated information in the Information Statement concerning the status of the ruling application. Each Plus500 Shareholder is encouraged to consult with its own tax adviser about the particular tax consequences of the Acquisition to it.

13. Playtech General Meeting

On account of its size, the Acquisition is classified as a Class 1 transaction under the UK Listing Rules. Accordingly, the Acquisition requires the approval of the Playtech Shareholders at a General Meeting. Such a meeting is expected to be convened as soon as possible by the publication of a circular to Playtech Shareholders.

14. Plus500 General Meeting

The Acquisition requires the approval of the Plus500 Shareholders holding a majority of the Plus500 Shares at a General Meeting. Such a meeting is expected to be convened as soon as possible by the publication of an Information Statement to Plus500 Shareholders.

15. Cancellation of AIM securities

Due to the Acquisition, it is intended that admission of Plus500's shares to trading on AIM shall be cancelled. A further announcement regarding such intended cancellation will be made in due course.