In a surprise announcement, David Baazov, Chief Executive Officer of Canadian based Amaya Inc. the parent company of PokerStars and Full Tilt Poker has stated that he intends to take PokerStars private.
Baazov proposes to make an all-cash offer of C$21 per share to buy the company, against the current price of around C$19.
The stock shot up by 27 percent to C$19.50 on the Toronto Stock Exchange after the sudden announcement but would later settle down to C$19.
His proposal to pay out C$21 per share will mean that shareholders will receive a premium of nearly 40 percent more than the stock’s current valuation. Baazov has an 18.6 percent ownership stake in Amaya Inc. and retains the option to buy a further 550,000 more shares.
It is currently not known how Baazov intends to finance the proposed buy-out, but Global Maxfin Capital analyst Manish Grigo has said that Baazov could recover the investment over time since typically a greater percentage of revenues in online gambling reaches the bottom line.
Amaya Inc has issued a statement which confirms that no discussions have commenced on the proposed buy-out between Amaya Inc and Baazov. There was an additional statement released by a special committee of independent directors from the board who stated that if Baazov decides to send in an official proposal, they will review the proposal in detail and then make a decision on the offer.
Amaya acquired PokerStars and Full Tilt Poker in 2014 for $4.9 billion and the two sites currently control close to 70 percent of the global online poker market. The company declared revenues for 2014 as US$9 million but has given a profit warning for its 2015 results by saying that profits are likely to be impacted due to the strong US dollar and the delay in launching its new sportsbook brand.
The company has suffered a series of recent setbacks, with legal obstacles arising in both online poker and daily fantasy sports which has also played a role in impacting is share prices. Amaya Inc has also been forced to slowdown the expansion of its daily fantasy sports brand, StarDrafts from operating real money games in US as many states and federal authorities have launched investigations into the legality of allowing DFS games under current gambling laws.
The company was also ordered by a Kentucky court in December 2015 to pay fines amounting to $870 million for losses incurred by the residents of the state who had played real-money poker between 2006 and 2011 on PokerStars.
Amaya’s share price has almost halved in value over the past 12 months, from around C$33 in early February 2015 to C$18 in February 2016.