Amaya Shareholder Meeting Reveals That Another Bidder Is In Play

The two major issues are the progress of bids for the company, and the securities investigation which has resulted in founder, President and CEO David Baazov taking a temporary leave of absence.

Alongside these issues there are several legal problems including the possibility of a class action suit against the company arising from any securities law violations which may have occurred, and the appeal against the $870 million judgment in Kentucky regarding PokerStars.

Amaya took the unusual step of holding the meeting in the absence of press and media. Outside the meeting, Amaya Vice President Corporate Communications Eric Hollreiser said:

“We’re treating it the way we feel is appropriate for shareholders this year.”

CEO Rafi Ashkenazi declined to speak to the media after the meeting.

Minimal share price movement indicates investors were not unhappy

Like pretty much every other stock in the world, Amaya saw a decline following the U.K. Brexit vote, but early trading yesterday morning while the meeting was in progress saw the price make a short term recovery rising by 3.6 percent. By the end of the day the price was back where it started, but this morning it is back up by 2 percent to $14.46 on the NASDAQ.

This suggests that there was little important confidential information handed out at the meeting. Any big news would have seen more share price movement.

The Financial Post managed to ask David Baazov for a comment as he left the meeting, but received an anodyne response:

“I’m just a shareholder of the company in support of management.”

They had more success in getting a comment from Jason Ader who was in the meeting:

“It’s an interesting time for this company. It’s got great assets, controversy, a lot of value and a dominant business.”

Ader is the CEO of SpringOwl Asset Management, which bought a 5.02 percent stake in bwin.party when founders Ruth Parasol and Russ Deleon sold their shares. Ader paid around $100 million for the position, but will have lost nearly half that value after bwin.party was sold to GVC.

Amaya press release announced a new bidder

The legal problems David Baazov is experiencing will make the Amaya board acutely sensitive to the way it handles possible bids for the company. It looks determined to give away the absolute minimum amount of information on any bidders until there is something material to announce.

The shareholder meeting press release reported that:

“As previously disclosed, several parties, including David Baazov, who is on a leave of absence as Chief Executive Officer of Amaya, have entered into confidentiality agreements with Amaya. A number of these parties have received management presentations and are conducting due diligence. Recently, one more party entered into the process.”

No details of who the new bidder might be have leaked out. The Special Committee appointed to review the bids as well as investigate the allegations against David Baazov is keeping its cards very close to its chest.

“The Special Committee believes the interests of Amaya and its shareholders are best served by maintaining confidentiality around the details of this process, but will provide further updates to shareholders as circumstances warrant.”

888 Holdings and Playtech both rumored to have an interest

From the language, it can be fairly deduced that there are at least three possible bidders who are being given access to management information.

David Baazov is one, the phrase “number of parties,” which was used in the last Amaya reference to the process, implies at least one more, and then there is the “one more party” announced yesterday.

Industry speculation suggests that two of the major online poker operators, 888 Holdings and Playtech could both be interested in the acquisition.

888 failed to buy bwin.party late last year, and Playtech has a substantial cash war chest available for acquisitions after its attempted purchase of Plus500 and Ava Trade failed on regulatory concerns.

McFeeters elected as director and immediately resigns

The shareholder meeting held elections for the board, which on the whole went without a hitch. The one unusual election was that of Paul McFeeters, who was proposed as a director, but who subsequently informed the board that he was unable to accept the directorship.

In accordance with an agreement made and published in advance of the meeting, McFeeters resigned immediately after being elected and was replaced by David Lazzarato.

McFeeters explained that his decision not to serve was “for personal reasons unrelated to Amaya.”

The other new director appointed was Alfred F. Hurley, Jr, a former head of global private equity at Merrill Lynch & Co.