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Plus500 shares drop 6% Tuesday, sit 13% below £4 Playtech offer price By LeapRate Staff on Wednesday, 06.03.15 Are stock market investors betting that the Playtech-Plus500 deal is likely to break up? Plus500 shares down A very wise newspaper magnate, when once asked to explain his company’s lagging share price, answered ‘the market is always right’. Hard to argue with that. And that phrase is also usually true in M&A transactions. When an offer is made to acquire a publicly traded company – such as the recent offer by Playtech PLC (LON:PTEC) to buy Retail FX and CFD broker Plus500 Ltd (LON:PLUS) for £460 million, or £4 per Plus500 share – the to-be-acquired company’s share price usually tells a very interesting story about what the market thinks of the deal, and what will ultimately happen: If the shares trade ABOVE the offer price, the market is betting that a better offer will ultimately be made than the existing one. Or, that a bidding war is about to start. If the shares trade right around the offer price, the market believes that the acquisition is a ‘done-deal’, very likely to close at the existing offer price. If the shares trade significantly BELOW the offer price, the market is betting that the deal is likely to NOT get done, at least on the terms offered. Based on that logic, it does seem as if stock market investors think there is a significant likelihood that the Playtech-Plus500 deal could unwind. Potential causes of a broken deal include things Playtech might learn in due diligence, or an unfavorable ending to Plus500’s current attempts to resolve KYC/AML issues with the FCA. There could be other reasons for Plus500’s share price remaining below the £4 Playtech offer price. We believe that many long-term Plus500 shareholders are taking the chance to recoup some of their losses from the past couple of weeks by selling now. Similarly, speculators who bought in recently (pre-deal) as Plus500 dipped into the £2-3 range are taking the quick money now and getting out. Some investors, such as Odey Asset Management, continue to buy (below £4), clearly betting that the deal will indeed get done at £4 – or perhaps an even better price. But if ‘the market is always right’, we probably haven’t seen the end of the Playtech-Plus500 story. 00010Total: 1 0 0 0 1 0 Total: 1 Short URL: http://leaprate.com/TiOCE TAGS: M&A ARBITRAGE, PLAYTECH BUYS PLUS500, PLAYTECH PLC (LON:PTEC), PLUS500 LTD (LON:PLUS) « FXPRIMUS reports May trade execution and... | LEAPRATE'S LIST OF GLOBALLY REGULATED BROKERS
yes i see your point …. yes I'm just an average punter …. trying to learn the art of trading.. and seriously thought I had done my homework re plus …. but never expected this sell out to be thrown in the works. thought I would just stay long until the sp recovered….. slowly slowly …….. to be honest yesterday I said wished Id stayed with boring lloyds … I made some good profits on lloyds but will prob lose them on plus….. however it took 3 years and it never got my adrenaline going like this one !! don't know if that good or bad
Thank you all for your replies…. Im learning fast ! unfortunately the hard way with this one… but learning all the same. What is very clear to me is the BOD new this was on the table last week at that AGM ….so all that we won't take a pay rise bla bla was totally Bo@@@@@s ……..if this deal does go through they get a very nice pay rise. and shareholders who bought at the higher get well and truly shafted…… but I guess no one put a gun to my head
This is very confusing ! if you know in 3 months you can get a guaranteed £4 for this share how come today I can pick it up for under £350? and make a guaranteed profit……. is it that this deal will prob not happen? Im tempted to try and make up some losses but gut feeling is telling me wait
Good Morning, I am completely new to share dealing and really only learning at this stage.. however I did purchased this share at a considerable higher amount than £4 so looks like I have learnt the hard way.. however am I being stupid I just noticed the share has dropped to 387 so even if you bought some more now ? the price they would pay you is £4 so still a small profit? or am i being totally stupid?