Amaya board forms committee to consider bid
Amaya, Inc., owner of the world’s largest online poker company PokerStars, announced that David Baazov, the company’s CEO, is offering to buy out all the shares of the company and take it private in an all-cash deal worth $2 billion.
The Montreal-based company said in a statement that Baazov and an unnamed group of investors are putting in a takeover bid of C$21 per share, for a total of C$2.8 billion, or US$2 billion. The offer price is a 40 percent premium over Amaya’s closing price on Toronto Stock Exchange the day of the offer. While Amaya’s shares soared 27 percent to $19 in early trading last Monday, it ended the day at $18, a 20 percent rise.
Some analysts speculated that the wavering share price indicates the $21-per-share offer is too low. In an interview with Bloomberg, Maher Yaghi, a Montreal-based analyst with Desjardins Capital Markets, pointed out that the offer is well below his own previous value estimate for Amaya of C$28 per share, and its peak share price last year of C$37.28.
“While some could see the offer as potentially being opportunistic, it is worth pointing out that the continued strength in the U.S. dollar is a potential headwind for the company’s European poker business,” Yaghi said in a note to clients. “In addition, the company’s elevated leverage in an environment of increasing credit spreads is another factor for shareholders to consider.”
Baazov has been aggressive in building up Amaya’s fortunes since taking over as CEO in 2006, conducting acquisitions of iGaming companies like Calgary-based Chartwell Technologies, Ireland’s Cryptologic and B2B poker network Ongame, as well as acquiring and subsequently selling U.S. Class II slot supplier Cadillac Jack, prior acquiring PokerStars in 2014 to become the biggest player in the $4 billion global online poker business.
Last year, Amaya’s Canadian-listed shared dropped 39 percent as the iPoker market evolved and the U.S. dollar strengthened. Baazov has responded by building up his own stake in the company, currently at 19 percent.
Amaya’s statement confirmed Baazov’s plans, but indicated that nothing is formal yet. “The board of directors of Amaya has established a special committee of independent directors to review any proposal that may be forthcoming, as well as other alternatives that may become available to Amaya,” the statement said. “Amaya’s lead independent director, Dave Gadhia, will chair the special committee.
“As of the time of this release, the special committee has neither received nor solicited a formal bid or offer related to a potential transaction, and there can be no assurance that Mr. Baazov’s intention will result in a formal bid or offer or that any such bid or offer will ultimately result in a completed transaction. Shareholders of Amaya do not need to take any action with respect to any potential proposal at this time. Amaya intends to provide updates if and when necessary in accordance with applicable securities laws.”
In other analysis, Eilers Krejcik Gaming principal Adam Krejcik speculated to the Las Vegas Review Journal on whether or not the bid is real. He wondered if the move was a tactic to drive up Amaya’s share price.
“While this could just be a bluff to try draw out competing bids, we believe that would be an incredibly risky proposition as there are only a few select gaming companies in the world who could realistically acquire PokerStars,” Krejcik told the paper.
Amaya acquired PokerStars two years after the business’s former owners paid a $731 million noncriminal settlement to the U.S. Department of Justice over the April 2011 Black Friday crackdown on illegal Internet gaming.
Amaya bought PokerStars and Full Tilt from Rational Group two years ago, and Baazov has spent much of the ensuing time clearing the name of the PokerStars brand in the U.S., where the company was among those that continued to operate U.S.-facing sites after passage of the 2006 Unlawful Internet Gambling Enforcement Act. Amaya is still facing “bad-actor” clauses in states considering internet gaming, despite the fact that Baazov purged all the former PokerStars ownership and executive team.
Having been found suitable by New Jersey regulatory authorities, PokerStars is now implementing a new multi-pronged business strategy including online casinos, a sports betting platform and a new daily fantasy sports brand.
Krejcik said Baazov’s attempts to take Amaya private, however, could be a setback in the U.S.
“Going private could negatively impact the perception of PokerStars/Amaya as a fully transparent entity and potentially raise concerns during any type of licensing process,” he told the Review Journal.
PokerStars has been cleared to launch in New Jersey through a partnership with Atlantic City’s Resorts casino.
Amaya said the special committee hasn’t received nor solicited a formal bid, and there was no guarantee Baazov’s offer would result in a completed transaction.
Since becoming president and CEO of Amaya in 2006, Baazov has employed a strategy of growth through acquisition, picking up businesses that included online gambling software provider CryptoLogic and Cadillac Jack, a maker of traditional slot machines.
