Online gambling software firm Playtech says it remains on the hunt for possible acquisitions while its Xwise digital marketing arm lays off the majority of its staff.
Playtech held its annual general meeting on Wednesday, at which chairman Alan Jackson said the company was having “active discussions” with a number of potential acquisition targets for its gaming division, while its financials division was looking at “selective bolt-on” acquisitions.
Last month, Playtech missed out on acquiring online technology rival OpenBet, which was snapped up by NYX Gaming (with a little financial help from William Hill, who had a contentious relationship with Playtech before Hills bought out Playtech’s share of the William Hill Online joint venture).
Having been pipped at the OpenBet post, Playtech is sitting on an acquisition war chest of nearly $1b, but should no suitable acquisition target present itself, Jackson said Playtech will consider returning some of that cash to shareholders, including Teddy Sagi, Playtech’s largest shareholder, company founder and erstwhile jailbird pornographer.
Sagi made a habit of selling his other companies to Playtech over the years, including PT Turnkey Services (PTTS), which provides marketing and customer relationship management (CRM) services to Playtech’s online gambling licensees.
On Wednesday, Israeli media outlet Globes reported that Xwise, a subsidiary of Playtech Cyprus Ltd that came over in the PTTS sale, was laying off around three-quarters of its 200-strong Israeli workforce. The cuts will reportedly leave Xwise with less than 60 local staff.
Globes said “a large proportion” of of Playtech licensees that utilized Xwise’s services had “chosen to focus on a smaller number of countries in which they have a strong brand name.” As a result, Playtech was shifting some of Xwise’s reduced business back to the mothership.
Playtech issued a statement to Globes saying the cuts were part of a “a process of reorganization in all the countries in which [Playtech] operates.” Playtech said there’d been “no changes” at Xwise since the 2011 PTTS acquisition and that Playtech was granting “extra retirement benefits” to affected staff.
In February, forex industry media outlet LeapRate reported that Playtech had enacted a similar purge of over 100 employees at the Israeli and Bulgarian offices of TradeFX, another Sagi company that Playtech acquired last year.
The purge may have stemmed at least in part by UK and Irish regulators’ refusal to approve Playtech’s acquisitions of forex firms AvaTrade and Plus500. LeapRate’s sources said the TradeFX staff who remained had their compensation shifted from salary-plus-commission to fixed salaries, suggesting that Playtech was trying to operate its financials division more like a bank and less like a boiler room, in the hope of avoiding future regulatory censure.