Amaya Inc. Chairman and CEO David Baazov is preparing to make an offer to acquire the entire company at a price of $2 billion, which would transition Amaya from a publicly-traded company to one that is held privately.
A press release issued Monday stated that Baazov “intends to make an all-cash proposal” to purchase the Canada-based Amaya at the price of CAD$21.00 per common share. That’s about $15 a share in U.S. currency and translates to CAD$2.8 billion (USD $2 billion) for the whole ball of wax.
♠ Op-Ed: Will David Baazov Buy PokerStars?
Most will recall that Amaya purchased PokerStars and Full Tilt for the sum of $4.9 billion in the summer of 2014. When looking at it from that perspective, one might assume that Baazov and his group of investors are lowballing Amaya shareholders. That’s not the case at all.
Baazov’s offer, which has yet to be formalized and is non-binding, is actually a 40% premium over the stock price of Amaya at the closing bell of Friday’s trading, which was CAD$14.99. That’s a far cry from roughly 14 months ago when shares of Amaya were trading on the Toronto Stock Exchange at almost CAD$39 following the acquisition of PokerStars and its assets just a few months earlier.
Suffice it to say, many shareholders are likely none too pleased at this point in time considering the common share value of less than CAD$15. Which is precisely why Baazov and his crew may be positioning themselves to buyout the company. Baazov currently holds 24.6 million shares of Amaya, slightly more than 18% of the company.
In response to Baazov’s stated intention to acquire Amaya, the company’s board of directors “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,” according to the press release.
News of Baazov’s proposal caused Amaya stock to rise 20% on Monday to CAD$18 per share. Depending upon which analyst you listen to, that price may be undervalued when considering the long-term prospects of Amaya stock.
In fact, it may be the shortsightedness of shareholders that has prompted Baazov and his investors to step up to the plate and state their intentions to acquire Amaya. Shareholders tend to look for immediate returns and may not see the big picture when it comes to potential growth.
PokerStars is poised to grow considering its recent forays into daily fantasy sports, sports betting, and its upcoming launch in the U.S. igaming market in New Jersey later this year. PokerStars recently registered their 100 millionth player across all of their brands, an achievement that has resulted in a promotional celebration that will giveaway millions of dollars this month.