Baazov Plans to Buy Amaya7 years ago
Yesterday saw some very surprising news from one of the poker industry’s biggest players; David Baazov - the CEO and Chairman of PokerStar’s owners Amaya – publicly announced his intention to make “an all-cash proposal to acquire Amaya”.
The announcement has sent some shock-waves through the industry, although Baazov’s ‘intention’ is by no means a legally-binding offer, and may involve nothing more than a speculative testing of the waters for any future investment, buy-out, or any number of other approaches.
Still, his statement is reasonably detailed, with PR Newswire carrying it in full.
David Baazov, Chairman and Chief Executive Officer of Amaya Inc., today announced that he, together with a group of investors with whom he is in discussions, intends to make an all-cash proposal to acquire Amaya at a purchase price presently estimated at CDN$21.00 per common share, representing a 40% premium to Friday's closing price on the Toronto Stock Exchange."
Detailing the current situation with Baazov and Amaya, the statement concludes:
David Baazov currently owns 24,564,047 common shares of Amaya, representing approximately 18.6% of the issued and outstanding common shares, and options entitling him to acquire 550,000 additional common shares."
For those who don’t know the short but colourful background to Amaya’s poker interests, it should be noted that back in June of 2014 Amaya (known then as Amaya Gaming) announced ‘one of the most ambitious acquisitions in the recent history of the Canadian markets.’
They stated that they would buy over Oldford Group Ltd, which was then the parent company of Rational Group Ltd, the world’s largest poker business and owner/operator of PokerStars and Full Tilt Poker.The price-tag, a phenomenal $4.9-billion, may have seemed ridiculous – but according to Cantechletter.com - ‘the acquisition increased Amaya’s revenue eightfold.’
The motives and future possibilities are already being picked apart by poker fans and analysts alike, with Alexandre Dreyfus of Global Poker Index fame, stating:
After a cycle of 12 years, poker is in an interesting situation. As an entrepreneur – with a leap of faith - investing millions and all my will into the next boom, I believe in a potential driven by the innovation, the risk and an understanding of disruption. I can sense that with this financial move, David Baazov will re-invigorate the poker landscape.”
Despite Dreyfus’ enthusiasm for Baazov’s move, he has stated quite clearly that he is not interested in being part of any such buy-out. His LinkedIn post, entitled: ‘Why delisting Pokerstars is great for poker?’ was edited to include the following list of disclaimers:
- I do not own and do not intend to own any Shares of Amaya.
- This is a personal point of view and does not reflect any insider information.
- I hope that move from Baazov will not start a bidding process from others acquirers that would end-up slowing the company operations.”
One analyst’s view of the proposal was also quite enthusiastic:
Some are saying that Mr. Baazov’s move was in response to the increased short position,” said Cantor Fitzgerald Canada analyst Ralph Garcea. “However, we believe it’s just another pivot in strategy (the fourth) that would best be served as a private company.”
He also mentions the possibility of the bidding war which Dreyfus warns of:
The analyst says he sees plenty of room for a higher offer from private equity or strategic buyers like Paddy, Betfair, William Hill, IGT/GTECH, Aristocrat and others.”
The playbook is straightforward,” according to Garcea. “Go private, acquire partypoker, acquire some sportsbook assets to accelerate BetStars’ growth, settle all claims and lawsuits inherited from Rational Group, wait for the US market to evolve, spin-out NewCo in two-three years time with $2B+ in revs and $800M+ in EBITDA – at a much higher valuation!”
Some forumites on 2+2 were more conservative in their views as to whether Baazov’s ‘intended’ buy-out was either realistic and/or a good move for poker.
With no details on who is gonna finance this latest saga in the life of AYA, seems sort of sketchy,” wrote PTLou, adding: “Pretty interesting to announce day before ICE (large gaming show in London. The euro version of G2E with more focus on online). Sounds like he will need some friends willing to right (sic) a check for $2 ba-billion, and double that if current debt holders are not in agreement.”
As always, the postings came thick and fast and not always relevant, in any way correct or even interesting. However, given the recent trials and tribulations over at PokerStars, any announcement connected to the company or their owners seems destined to create such conflicts.
Where is he getting this money? This doesn't make sense. Amaya had to borrow a ton of money to buy Pokerstars initially. Now he has enough cash to take over the entire company? Hopefully player funds are still segregated...” was the wary response of that_pope, who added, “Must be a large group of investors, but why couldn't he do this initially when purchasing Pokerstars?”
As Deyfus reminded us in his LinkedIn post yesterday, "the acquisition of Pokerstars by Amaya in 2014, was obviously a debt-backed operation,” but recent analysis has pointed out that the core business of Amaya – of which poker is expected to reach 69% or so by the year 2020 – is in a fairly healthy condition.
Dreyfus considers the management approach of the company so far to have been “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.”
He added his own variation on an age-old business sequitur: ‘No risk, no profit!” ending with the somewhat portentous-sounding:
Nice hand David. GG. I hope it is not your last move.”
Whether Baazov actually intends to follow-through with his bid remains to be seen, but rest-assured that PokerTube will keep you updated as and when any news breaks on this story.
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