David Baazov is back. Former Amaya Chairman and CEO of Amaya made news again, this time with an offer in hand to buy the company he founded in 2004. The all-cash bid amounts to C$24 per share for the remainder of the company equity that he doesn’t currently own, and his plan is to take Amaya from a publicly-traded one to private.
He's back! Baazov offers C$24 a share for Amaya. Currently been bouncing around between $18-20. Were over $30 for at least a year though.— Alun (@Poker_Hack) November 14, 2016
Amaya has been at the center of numerous takeover and merger bids, especially within the past year as Baazov was investigated on insider trading charges and ultimately resigned. But will Amaya finally accept an offer – the one from its former owner – after finding success on its own?
Is Baazov a Knight or a Nuisance?
Baazov founded Amaya and grew it into an online gaming leader, one that made its biggest move in 2014 with the purchase of PokerStars and Full Tilt for $4.9 billion. The deal catapulted Montreal-based Amaya to the position of largest publicly-traded online gambling company in the world at that time.
However, in early 2016, a longtime investigation by the Quebec Financial Securities Regulator charged Baazov and others with a slew of insider trading offenses regarding the manipulation of stock prices at the time of the PokerStars/Full Tilt deal. While Baazov denied all charges, he quickly announced an indefinite leave of absence from the company to fight the charges and work on his plan to purchase Amaya from shareholders and take it private.
An initial and informal bid was considered by a specially-formed Amaya committee, but nothing came of a finalized offer at the time. Baazov officially resigned from the company and went quiet in August, just weeks before the Quebec watchdog group detailed its charges and revealed evidence against him.
Nearly three months after Baazov departed Amaya and left the company to thrive without the weight of criminal charges against its CEO and the uncertainty of what might follow, he appeared on November 14 with that formal and non-binding bid. Baazov and backers offered to put US$200 million into escrow if an agreement is reached, as a portion of the US$400 million deferred purchase price for Amaya’s acquisition of PokerStars and Full Tilt. Baazov and his financial support system had done their due diligence.
Do They Have a Deal?
It is quite difficult to know what Amaya executives and shareholders are thinking. The company has been through its share of ups and downs over the last several years, and while it is on a consistent path to growth, unloading it might be worth the offer.
The C$24/share price offered by Baazov is significant in that Amaya has not traded at that price for well over one year. And it is higher than his original informal bid price of C$21/share. The deal was also announced on the same day that Amaya revealed its third quarter earnings, complete with growth of 9.5% for the quarter. Total revenue was reported as US$270.8 million, with net earnings from continuing operations of $12.5 million showing an increase of 136.4%. And though online poker was down 4% to $196.8 million, current CEO Rafi Ashkenazi noted a stabilization of poker revenues in an otherwise volatile market.
$AYA Stock up 5.51% Amaya Inc's former chief executive, David Baazov, has offered to buy the Canadian online gambling company— datastocks (@Renepdata) November 14, 2016
Just last month, Amaya revealed it was in talks with sports betting and online gaming giant William Hill regarding a $2 billion merger. While the company had several suitors that also included GVC Holdings, parent company of bwin.party, talks with William Hill proceeded to a formal level. In the end, protestations from a top Hill investor seemed to sink the deal.
Amaya revealed some disappointment and frustration with the collapse of the talks. Eric Hollreiser, VP of Corporate Communications for Amaya, noted the number of interested parties in the company and the great amount of “strategic and industrial logic to the potential pairing” with William Hill. He also objected to some of the language used by the objecting investor and wrote a detailed rebuttal, asserting the growing status of Amaya, as if to encourage future bidders.
The Baazov bid, then, should be no surprise. However, the deal is far from the lucrative and global potential of a merger with a company like William Hill. While it merits consideration and is currently undergoing a rigorous examination by a special committee, a final decision is uncertain.
The possibilities remain open:
- Amaya may accept the deal, pushing the company out of public scrutiny and back into the hands of the person who built and grew it from the beginning.
- Shareholders may reject the deal as insufficient in light of larger bids from companies like the aforementioned William Hill.
- The bid may draw the attention of former suitors like GVC, who could reopen talks with Amaya and make a bigger offer that would keep the company on its global growth path.
- The stock price could continue to climb on speculation of the Baazov deal and require a subsequent offer that may spur a bidding war for Amaya.
Considering PokerStars is the overwhelming king of online poker across the globe and sets the standards for the online poker industry as a whole, the poker community is watching closely, as is the rest of the online gaming world.