Amaya Gaming to acquire PokerStars for US$4.9bn
Canadian gaming provider Amaya Gaming is set to acquire Rational Group, the parent company of the world's leading online poker site PokerStars, for US$4.9bn (€3.6bn).
Amaya struck the deal with Oldford Group Limited, the holding company for Rational Group and will acquire 100% of the issued and outstanding shares of Oldford Group in an all-cash transaction for an aggregate purchase price, which includes certain differed payments and is subject to other customary adjustments.
The transaction will be financed by a combination of cash on hand, new debt, and a private placement of subscription receipts, common shares and non-voting convertible preferred.
PokerStars' senior management team will remain with the group but the deal means Oldford shareholder and PokerStars chief executive Mark Scheinberg "will resign from all positions with Oldford Group and its subsidiaries”.
With Mark Scheinberg's father and PokerStars founder Isai Scheinberg having stepped down from any involvement with the group as part of its dealings with the US Department of Justice, the path has been cleared for the company to potentially return to the US market, starting with the state of New Jersey, where Amaya has casino content deals with a number of licensed operators.
Rational Group recorded revenues of US$1.1bn and adjusted EBITDA of US$420m in 2013, up on 2012's US$976m and US$342m respective figures. The group's 2013 cash flow stands at US$317m.
Amaya said that the deal would "be immediately accretive to earnings and provide strong cash flow from operations".
"This is a transformative acquisition for Amaya, strengthening our core business-to-business operations with a consumer online powerhouse that creates a scalable global platform for growth,” Amaya chief executive officer David Baazov said.
“Mark Scheinberg pioneered the online poker industry, building a remarkable business and earning the trust of millions of poker players by delivering the industry’s best game experiences, customer service and online security.
"Working with the experienced executive team at Rational Group, Amaya will continue that tradition of excellence and accelerate growth into new markets and verticals.”
Rational Group founder and chief executive officer Scheinberg added: "Our achievements and this transaction are an affirmation of the hard work, expertise and dedication of our staff, which I am confident will continue to drive the company’s success.
"The values and integrity which have shaped this company are deeply ingrained in its DNA. David Baazov has a strong vision for the future of the Rational Group which will lead the company to new heights
Amaya's share price has risen markedly over the past few weeks on the back of the acquisition rumours, but the company recently denied it was looking to acquire another company.
According to Amaya, the agreement will see the creation of the world’s largest publicly-traded online gaming company, due to the popularity of PokerStars and Rational’s other online poker brand Full Tilt Poker. The two brands have more than 85 million registered players worldwide.
The deal will combine Rational Group's business-to-consumer poker business - which includes PokerStars, Full Tilt Poker, live poker tours and events, as well as online and television poker programming - with Amaya’s business-to-business interactive and physical casino and lottery gaming solutions.
Amaya said that it did not anticipate any changes to its own board.
Related article: Amaya Gaming denies acquisition speculation