Amaya Going Private?

PokerStars’ Run As a Public Company Could Be Cut Short By Baazov Bid

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Amaya has confirmed in a press release that David Baazov, the CEO and Chairman of Amaya, parent company of PokerStars and Full Tilt, has indicated his intention to make an all-cash proposal to purchase the company.

You can read the full SEC filing from Amaya here.

According to the press releases, Amaya received a non-binding indication from Baazov to purchase the company at a price of $15 (C$21) per common share, or about $2 billion (C$2.8 billion).

This is a 40 percent premium over Friday’s closing price, but well below the company’s share price high of nearly $38 hit in late 2014.

Amaya purchased PokerStars and its assets in June of 2014 for $4.9 billion; Baazov currently owns over 2.5 million shares (18 percent) in Amaya.

It should be stressed that at this time, no formal offer from Baazov or anyone else has been received by Amaya.

As for Amaya’s reaction, per the press release:

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. Amaya’s Lead Independent Director, Dave Gadhia, will chair the special committee.

What’s going on?

The $64,000 question is a simple one: Why?

Why after a year and a half is Baazov considering purchasing the company and taking it private?

There are several possibilities:

  • The company is thought to be under intense pressure from short sellers, a pressure that could have created an opportunity (and perceived value) in taking the company private – or at least in floating the notion.
  • Does Baazov see an even greater long-term opportunity by taking PokerStars and its assets private at this time? Given the current online gambling landscape, and the numerous new verticals Amaya and PokerStars have launched since Amaya acquired the company last year, including the launch of its StarsDraft DFS site, expanding its casino products, and the recent launch of its sports betting platform, BetStars, Baazov may see significant value down the road that he believes is not currently priced into his stock.
  • Is there a feeling that the company’s hands are tied when it comes to fulfilling its long-term goals due to its short-term obligations to shareholders? Perhaps Baazov wanted to go further with the recent changes to the company’s VIP program, or perhaps he wanted to roll them out in slower manner.
  • Did PokerStars simply need the “cleansing” of becoming a public company? After all, the sale to Amaya led the New Jersey Division of Gaming Enforcement reopening and eventually approving the company for a transactional waiver. It also saw several California tribes and more notably, Caesars Entertainment, withdraw their support of “bad actor” prohibitions on PokerStars.
  • Or, is it, as Alun Bowden speculated, simply a way to flush out other prospective acquirers of the company?

Quite frankly, it could be any or all of those things, and several other possibilities to boot.

What happens next?

If the bid is formally made, and later accepted, it’s important to note that billion-dollar takeovers aren’t transacted overnight, or even over fortnights.

There will almost certainly be a lengthy negotiation, and the emergence of a second bidder, or multiple bidders, could slow down, or even derail the process.

This was the case with the drawn out acquisition of last year, when eventual winner GVC Holdings got into a protracted bidding war with 888 Holdings.

Even if the negotiation between Amaya and Baazov is completed without a hitch, it will still have to be approved by Amaya’s shareholders, and vetted and approved by the proper regulatory agencies.

For a comparison, Amaya’s initial purchase of PokerStars back in mid-June of 2014 was officially approved at the end of July (roughly seven weeks), which is considered lightning speed for such a monumental deal.

At the time of the sale, Amaya conservatively estimated the deal would be officially approved by January 1, 2014.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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