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Baazov made a press statement explaining that:
“It became evident that the share price premium demanded by certain shareholders exceeded the price at which my investors and I would be willing to complete a transaction.”
Shortly before trading in Amaya began on Tuesday, December 20, Amaya released a terse statement of its own simply saying:
“Amaya Inc. (NASDAQ: AYA; TSX: AYA) confirmed today that discussions with its former Chief Executive Officer, David Baazov, regarding the offer to acquire Amaya by an entity to be formed, have terminated.”
Baazov’s offer of CA$24 represented a 30 percent premium to the share price on Friday, November 11.
Immediately after the news broke that the bid was off, Amaya shares fell back by a few percent. The stock ended the trading day down 2 percent to CA$19.00 —21 percent below Baazov’s bid.
In rejecting the bid at that price, the Amaya board must have felt confident that the company can grow its PokerStars, Full Tilt and BetStars brands to make up the difference. However, the price alone may not have been the only consideration.
On December 6, SpringOwl Asset Management sent Amaya’s board a letter strongly opposing acceptance of the bid.
Not only did SpringOwl CEO Jason Ader object to the price, he objected to the company having any further involvement with David Baazov. Ader even recommended that Baazov’s 17 percent stake in the company be held in trust to reduce his influence over the board.
Baazov may have been the blue-eyed boy when he made his audacious bid for the Rational Group, owner of the PokerStars and Full Tilt brands, but since then his star has faded.
It would be cynical to suggest that the board took the diplomatic option in dealing with Baazov’s bid—not rejecting it, but demanding a price which Baazov was not prepared to pay.
SpringOwl may be satisfied with the outcome, but now the board must show that the decision to reject a 30 percent premium was a good one.
Shareholders will judge on the basis of the next few quarters of revenue growth. If the company misses the mark, they may again demand that the board look for strategic options.
After a year where Amaya has been rocked by external influences, including Baazov’s bid, the failed merger with William Hill, and the response to the Kentucky ruling, shareholders will be hoping that the board can return to focusing on the internal issues it must address to maximize Amaya’s potential for growth.