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Amaya’s Special Committee has concluded its strategic alternatives review with a recommendation that “remaining as an independent publicly-traded corporation best positions Amaya to deliver long-term shareholder value.”
The board has accepted that recommendation which means that there is no other buyer or strategic partner waiting in the wings. Rumors that partypoker owner GVC, or other private equity bidders may be interested in a bid for Amaya can now be put to rest.
Divyesh (Dave) Gadhia, chairman of Amaya, commented:
“Together with our financial advisors, we evaluated a wide range of strategic alternatives to maximize shareholder value and have concluded that remaining an independent company is in the best interest of Amaya’s shareholders at this time. The Board has full faith in Amaya’s management to execute on its strategy and objectives.”
The declaration comes even though Amaya’s founder and former chairman, president and CEO, David Baazov has informed the board “that he continues to be interested in acquiring all of the outstanding shares of Amaya.”
The regulatory news statement said that:
“The Special Committee has not received an offer from Mr. Baazov that it or its advisors believes is capable of resulting in a completed transaction. Accordingly, while the Board will consider any bona fide offer that Mr. Baazov or any other party may make, Amaya’s review of strategic alternatives has concluded.”
The end of the deal with William Hill produced an unsurprising fall in Amaya’s stock price which was down over 8 percent in early trading.
In anticipation, Amaya released its Preliminary Third Quarter Results And Full Year 2016 Guidance.
CEO Rafi Ashkenazi said:
“We anticipate our third quarter performance will continue to demonstrate the improving strength of PokerStars’ core poker business, as well as continued growth in our new verticals of online casino and sports betting.”
He added that the company’s priorities remain the same:
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William Hill’s statement explained the key reason why the merger will not go ahead:
“After canvassing views from a number of William Hill’s major shareholders, the Board has decided that it will not pursue discussions with Amaya. Accordingly, the Board has informed Amaya that it is withdrawing from discussions and wishes Amaya well for the future.”
Last week, William Hill’s largest shareholder, Parvus Asset Management, wrote a letter to the William Hill board saying that it would oppose the deal as the result of its “limited strategic logic”.
Co-Founder of Parvus, Mads Eg Gensmann told Reuters:
“It shouldn’t take more than five minutes of the board’s time to realize this deal doesn’t pass the smell test.”
Parvus owns 14.3 percent of William Hill and was obviously unimpressed with the board’s statement that:
“The potential merger would be consistent with the strategic objectives of both William Hill and Amaya and would create a clear international leader across online sports betting, poker and casino.”
William Hill’s share price remained stable following the news suggesting that investors are content with the decision to withdraw from the deal.
The merger proposal valued William Hill’s shares at just 295p ($3.60) a share. To make up the difference the merger would have needed to grow the combined company rapidly by over 33 percent.
In a merger, shareholders don’t get the big pay-off as they would in a leveraged buy-out so they judge the value of the deal based on the increased potential for growth that will arise.
In this case, they didn’t buy the story.