David Baazov Makes $6.6 Billion Offer For Private Takeover of Amaya

Biding his time, David Baazov (cover image), former CEO and founder of Amaya has struck at just the right moment, once again bidding to take-over the company in a deal estimated to be worth C$3.48 billion ($2.56 billion). Amaya listed on the Toronto Stock Exchange saw its shares respond by rising to C$21.69, registering an increase of 18.27%, but were still less than the offer price, by Baazov of C$24 per share.

The saga is long and colourful, starting from Baazov buying the Rational Group in August, 2014 for a $4.9 billion deal, down to being charged with “insider trading” early this year, which forced him to step down from his position as CEO, though he has maintained that he is innocent. In the interim, Amaya was recently approached by William Hill, UK’s largest bookmaker in a reverse take-over that failed due to objections by its largest shareholder, Parvus Asset Management. Baazov’s high-priced offer comes close on the heels of the failed talks.

Latest Baazov Offer

The news broke on Monday, Nov 14 that Baazov had made a formal offer stating that it was on behalf of an entity, yet to be formed that would have him in the lead. Baazov already owns 17.2% of Amaya, who said that they were considering the deal.

In a regulatory filing, Amaya revealed that the deal is estimated to be worth a total of $6.6 billion, including debt and transaction costs. The $4.1 billion equity part would be mostly financed by four funds of about $3.65 billion, as well as Baazov’s shares.

Baazov declared that the to-be-formed business entity would pay $200 million of the $400 million deferred purchase price Amaya had given for the take-over of Rational Group. He further added that his to-be-formed entity would even release these funds in advance if required. Baazov’s offer is at a premium of 30.9% of the current Amaya share price.

Experts have pointed out that the offer is higher than the valuation of the company by the industry and Chad Beynon Macquarie research analyst stated that “I think a lot of groups would like to have this business.“

Under Baazov’s leadership, Amaya had taken over the Rational Group in 2014 for $4.9 billion, gaining its flagship sites PokerStars and Full Tilt. The latter had been lately integrated into the much more popular PokerStars, besides a series of policy changes made over the past one and a half years.

Amaya Takeovers

The Baazov offer comes just after talks for a deal between William Hill and Amaya failed, as the former’s largest shareholders objected to the deal. Parvus Asset Management even wrote a letter pointing out to numerous issues regarding the gaming industry and more. In retaliation, PokerStars posted on its official blog, pointing out to factual and other errors made in that letter.

William Hill a far smaller company compared to the giant Amaya, had several experts questioning viability of the deal.

Baazov had come out of the cold to create Amaya and turn it into a money-spinner with the acquisition of PokerStars, which saw a legal re-entry into the United States, late last year.

A number of unpopular (criticized by regular players) policy and software changes to favor new and recreational players reaped rich dividends taking the company into the profit zone and Baazov believes that by taking the company private he can further its growth.

“As the online gaming industry continues to mature, I believe that it is in the best interests of Amaya to be positioned as a private company,” Baazov said. “While Amaya incurs the substantial costs and scrutiny associated with being a reporting company, it obtains no benefit from being public.“

Amaya Profits – FYQ3

Monday also saw Amaya posting a profit at its third quarter ending September 30, 2016.

According to Thomson Reuters I/B/E/S, Amaya earned 42 cents per share in the third quarter ending September 30, far more than analysts’ estimate of an average 38 cents.

In all, the company’s total revenue rose 9.5% to $270.8 million from the earlier $247.3 million, which again was higher that the analyst average estimate of $270.1 million.

Rafi Ashkenazi, Amaya CEO, who took over after Baazov stepped down declared that “As we have concluded the strategic review process, we are excited to continue focusing on improving the company and our operations.I am particularly pleased with our core poker business as we believe the proactive changes we made to our poker ecosystem have both substantially offset and began to reverse certain negative trends facing that business. We plan to continue leveraging this positive momentum into our casino and sportsbook offerings as we focus on becoming the world’s favorite online gaming destination and maximizing winning moments for all of our customers.”

Baazov – Amaya

In February, Baazov had made a non-binding proposal to take the Amaya private for C$21 per share, but was a month later charged with ‘insider trading’, along with his brother Josh Baazov and close friends. Subsequently, Baazov stepped down from his position on an ‘indefinite leave of absence’ and in August had resigned from all posts held by him.

At that point, Amaya became open to numerous acquisition offers from different entities, but nothing materialized.

Summary

Baazov, a construction worker’s son from Montreal rose to lead one of the largest giants in the gaming business world and the way he negotiated the $4.9 billion deal to acquire the Rational Group is corporate-room lore today.

Though he is still facing charges for “insider trading” he has insisted that he is innocent. If anyone can pull this take-over off, it is Baazov. It would be foolish to write him off easily and it will be highly interesting to watch the Amaya saga and Baazov’s moves in the days to come.