Amaya’s Chairman and Chief Executive Officer, David Baazov, this week began efforts to privatize the entire company. Baazov has reported that he and a group of private investors are willing to spend $2.8 billion to own Amaya in its entirety. Amaya confirmed Baazov’s intentions of purchase on February 1, but no solicited or formal bid has officially been submitted.
In 2014, Montreal-based online gambling company Amaya acquired online poker giant PokerStars for $4.9 billion. One year later, Amaya common stock was listed on the NASDAQ under the ticker symbol AYA. Previously, Amaya was listed on the Toronto Stock Exchange.
Vice President of Corporate Communications Eric Hollreiser posted the announcement via Twitter on Monday:
The five largest shareholders in Amaya, excluding Baazov, collectively own 24 percent of the company. Baazov is the largest shareholder, with 18.6 percent of Amaya shares as well as options to buy 550,000 more shares. Baazov has announced an informal bid for the shares at $21 per share.
In response to Baazov’s bid, Amaya’s board of directors established a committee composed of independent directors to evaluate and review any proposals that Baazov might submit.
What could have sparked this decision?
Amaya’s biggest shareholders might not be pleased with the way the company’s stock has performed in Toronto, recently seeing record lows. Analysts have speculated that steps towards privatization might be Baazov’s attempt to drive Amaya stock back into the positives.
The buyout could also be related to Baazov seeing significant potential in his company’s future growth. Amaya has launched several new ventures that have the potential to be successful. The company’s newly launched products include daily fantasy sports site StarsDraft, BetStars sports wagering, and a massive expansion of online casino products.
There have been rumors that shareholders will refuse Baazov’s offer of $21 per share. When news of the buyout hit Canadian media, Amaya stock saw only a brief positive surge early in the day. Analysts commented that they believed this was due to investors thinking the offer was too low.
Macquarie Research analyst Chad Beynon made a statement after the announcement speaking to how shareholders might react to the news:
“We see this stock as a double—you just have to be patient and stick through some of these catalysts. We believe they will want to hold out for more, particularly given the flurry of major acquisitions in the last 24 months.”
The biggest shareholders for Amaya include BlackRock Asset Management, PointState Capital, and Caledonia Investments.
What’s the next step for Amaya?
In Amaya’s press release about the potential buyout, direction was given to the shareholders that no action on their part will be necessary, and updates will be provided immediately as developments occur.
Amaya said the only plan of action right now is to create a committee to handle the potential buyout:
“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.”
