Amaya Inc’s former chief executive, David Baazov, has made a non-binding all-cash bid to buy Amaya and take it private in a deal valued at about C.48 billion or .56 billion.
The entire deal including debt and transaction costs is valued at $6.7 billion, Amaya said in a regulatory filing.
Baazov offered to pay $24 Canadian dollars per common share and put up $200 million that Amaya needs in February to make a $400 million scheduled payment to the previous owners of PokerStars. Baazov would contribute his 17.2 percent stake in Amaya to the deal and said he has lined up equity commitments from several investment funds.
“As the online gaming industry continues to mature, I believe that it is in the best interests of Amaya to be positioned as a private company,” Baazov wrote in a letter to the company’s board, according to U.S. filings quoted by Bloomberg News. “While Amaya incurs the substantial costs and scrutiny associated with being a reporting company, it obtains no benefit from being public.”
According to Reuters, the company’s Toronto-listed stock rose as much as 18.27 percent after the announcement, but was still below the offer price of C$24 per share.
Amaya said it would consider Baazov’s offer in a statement, but cautioned that there is “no assurance that the offer will result in a completed transaction.”
Baazov already owns about 17.2 percent of Amaya, including options. He said he is making the offer on behalf of a to-be-formed entity that he will lead.
According to Bloomberg, the $4.1 billion equity portion of the offer comprises $3.65 billion in commitments from sponsors and $437 million of Baazov’s own common shares. The group plans to buy $1.15 billion of Amaya’s convertible preferred shares, in addition to common shares, and assume $2.55 billion of debt, the filing shows.
Baazov said he was also prepared to pay $200 million toward a deferred payment the company owes to the former owners of PokerStars, which Amaya bought in 2014.
“Because of my familiarity with Amaya, I am in a position to negotiate a definitive agreement that need only contain limited representations and warranties, on an expedited basis, thereby reducing any distraction to management,” Baazov said. “I expect to be able to settle the terms of the definitive agreement quickly.”
Baazov said in the filing that equity financing has been committed to by two Hong Kong-based firms, Head & Shoulders Global Investment Fund SPC and Goldenway Capital SPC, and one from Dubai, KBC Aldini Capital Ltd. He said another firm, Ferdyne Advisory Inc., was also contributing funds. A representative for Baazov declined to say where Ferdyne was based, Bloomberg reported.
In February, Amaya said it had received a non-binding proposal from Baazov to take the company private for C$21 per share. However, Baazov was then charged with insider trading by Quebec’s securities regulator, and took an indefinite paid leave of absence.
The charges stemmed from an investigation into Baazov and other executives in 2014 for trading in Amaya’s stock in advance of Amaya buying PokerStars for $4.9 billion. Baazov has denied the charges.
The bid come as Amaya reported revenue increases for the third quarter. Amaya’s total revenue rose 9.5 percent to $270.8 million from $247.3 million, marginally higher than the average analyst estimate of $270.1 million, Reuters said.
While the company’s poker revenue was relatively stagnant, its online casino and sportsbook showed growth and represented 24 percent of total revenue for the quarter, up from 15 percent for the third quarter in 2015.
The company also reported a 5 percent year-over-year increase in active unique users to 2.4 million.
Amaya also said it had concluded an internal strategic review of its expense structure and to identify other means to enhancing shareholder value. The company said it had gone through office restructurings and personnel reassessments around the globe, though the company does not “expect a significant net reduction in headcount by the end of 2016,” it said in a press release.
Last month, Amya ended merger talks with UK Bookmaker William Hill after major investors in the company objected.
