David Baazov, Chairman and Chief Executive Officer, of Amaya Inc. – owner of the PokerStars online gambling website – and a group of investors are planning to take the company private in an all-cash deal valued at about $2.8 billion.
Mr. Baazov, the boss of Montreal-based Amaya is in talks with unnamed backers to buy the company for $21 per share, according to a news release.
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Amaya confirmed on Monday it has received a “non-binding indication” from Mr. Baazov of his planned bid and said it has set up 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.” Dave Gadhia, will chair the special committee.
There have been no talks yet between Mr. Baazov and Amaya and the “form and structure” of the proposed transaction have not been determined, said the press release.
Mr. Baazov owns about 18.6 per cent of the outstanding shares of Amaya and options to buy 550, 000 more shares.
Amaya, Canaccord Genuity Securites and Manulife Securities are under investigation by Quebec’s securities regulator over allegations of insider trading involving Amaya shares ahead of the company’s takeover of PokerStars in 2014.
The Globe And Mail says that search warrant filed in Quebec court last year revealed that the Autorité des marchés financiers (AMF) seized computers, e-mails and phone records from three Amaya executives, including Mr. Baazov, chief financial officer Daniel Sebag and an unnamed manager. Documents and materials were also obtained from three Canaccord Genuity employees as from 15 brokers in the Montreal office of Manulife.
Amaya and Canaccord have stated they discovered no evidence of wrongdoing by the employees and executives named in the AMF probe. The AMF has received a report from Manulife on its brokers’ purchases and sales of Amaya stock and Manulife has said it continues to co-operate with regulators.
In a separate development, Amaya was hit last month with an $870-million (U.S.) verdict against the company for alleged losses by state residents who played PokerStars games between 2006 and 2011. Amaya said it will appeal the judgment.
According to The Globe And Mail, In a note to clients Monday, Desjardins Securities analyst Maher Yaghi said that while Mr. Baazov’s planned offer might appear potentially opportunistic to some observers, “it is worth pointing out that the continued strength in the US dollar is a potential headwind for the company’s European poker business. In addition, the company’s elevated leverage in an environment of increasing credit spreads is another factor for shareholders to consider.”
Mr. Yaghi said the potential offer is “below our fundamental valuation” of $28.50 (Canadian) for Amaya shares.
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