Playtech to buy Consolidated Financial Holdings for up to $120m

Gaming software development company Playtech has agreed to buy Consolidated Financial Holdings for up to $120m – a deal it said will enhance its position as it continues to build a B2B offering in its financials division.

Playtech will buy 70% of CFH upon completion of the acquisition, which is expected to take place on 30 November. The remaining 30% will be subject to put and call options between Playtech and CFH's management team, who are remaining with the business, and which can be exercised in 2019.

CFH generates revenue primarily from trading volume processed through its brokerage platform, either as clearing fees or technology services. It currently has over 400 customers and partners worldwide in more than 80 countries, which service thousands of retail customers worldwide.

Playtech’s chief executive officer Ron Hoffman said: “The acquisition of CFH will strengthen Playtech's offering in the B2B market of financial trading and provide the foundation for future acquisitions as well as to become one of the only businesses to offer proprietary, dedicated B2C and B2B platforms to clients.

"CFH has proven technological capabilities and has developed not only a leading platform in the Straight Through Processing brokerage industry, but also relationships with an impressive range of retail brokers operating in a variety of jurisdictions worldwide, alongside long term relationships with a suite of tier 1 banks, prime brokers and liquidity providers.”

Canaccord Genuity said the transaction was likely to be immediately earnings-enhancing, and should generate a double-digit first year return on investment.

The brokerage left its full-year 2016 forecasts unchanged, but lifted its full-yeae 2017 EBITDA estimate from €364.9m to €374.5m and its earnings per share forecast by 2% to 34.5 cents. Canaccord upped its FY18 EBITDA estimate from €395.5m to €407.4m, and its EPS estimate by 3% to 36.9 cents.

At 1152 GMT, the shares were up 3.7% to 915.50p.