Amaya CEO Wants to Buy His Entire Company
The idiom tells us that it is March that is supposed to come “in like a lion,” but it is February that is entering like a lion for the poker world. On Monday, Amaya, Inc., parent company of PokerStars and Full Tilt, announced that its CEO, David Baazov has made it known that he intends to make an all-cash offer to buy the entire company at CAD $21 per share.
In a brief press release, the company said:
Amaya Inc. (NASDAQ: AYA; TSX: AYA) confirmed today that it has received a non-binding indication from its Chairman and Chief Executive Officer, David Baazov, that he intends to make an all-cash proposal to acquire Amaya at a price currently estimated by Mr. Baazov to be C$21.00 per common share. The board of directors of Amaya has 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. Amaya’s Lead Independent Director, Dave Gadhia, will chair the special committee.
As of the time of this release, the special committee has neither received nor solicited a formal bid or offer related to a potential transaction and there can be no assurance that Mr. Baazov’s intention will result in a formal bid or offer or that any such bid or offer will ultimately result in a completed transaction.
Shareholders of Amaya do not need to take any action with respect to any potential proposal at this time. Amaya intends to provide updates if and when necessary in accordance with applicable securities laws.
As the press release says, nothing has happened yet aside from Baazov saying he wants to do this and the company putting together a review committee. The financial markets, though, reacted extremely favorably to Baazov’s possible attempt to privatize his company. Amaya’s stock has been falling for the past six months and the past three especially. It closed on Friday on the Toronto Stock Exchange at CAD $14.99, barely above a 52-week low. In the first minute of trading Monday, however (the news came out before markets opened), Amaya’s share price skyrocketed 27 percent. It finally closed Mondayat CAD $18, up 20 percent.
Baazov owns 24.6 million of Amaya’s 133.426 million outstanding shares with an option to purchase another 550,000. Thus, the CAD $21 million per share proposal would put the market cap of the company at CAD $2.8 billion (USD $2 billion).
At least one prominent figure in the online poker world thinks this is a great move by Baazov. On LinkedIn, Mediarex Sports & Entertainment CEO Alexandre Dreyfus wrote, “While the company is leading the poker market with +70% market-share, the growth of revenue has been limited and paradoxically the ability to invest and innovate into the poker vertical, was clearly limited because the priority was to pay back the debt AND please the analysts.”
“Pokerstars has enough funds to invest, but had the obligation to show analysts immediate return. It was impossible to develop a long-term strategy, everything was focus on: Q1, Q2, Q3 and Q4. The management was not driven by long-term approach, but by short term return. It was frustrating. It was legit, but it doesn’t help poker, and those who love that industry.”
Going private, Dreyfus believes, will allow Baazov to be able to focus on building a strong gaming business in the long-term, to take risks and innovate without worrying about pleasing investors in the short-term.
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