Amaya Q3 growth as Baazov submits takeover bid

15 November 2016

David Baazov, former chief executive of Amaya, has submitted an offer to acquire PokerStars' parent company, as the company revealed 9.5% growth for the three months to September 30.

Put forward on behalf of an entity, the bid of CAD$24.00 (€16.48/US$17.76) per common share will now be considered by the Amaya board, with the assistance of its advisors.

In a statement, Amaya said that the offer, which caused shares to jump 17% on Monday morning, provides for a US$200 million deposit into escrow upon execution of a definitive agreement.

This sum would be in respect of a potential transaction that would be converted into a one-year structurally subordinated, interest-bearing debt obligation to fund a portion of the US$400 million deferred purchase price for Amaya’s acquisition of Rational Group in August 2014.

This amount would be convertible into equity following the closing of a potential transaction.

Baazov relinquished his post as chief executive of Amaya on a temporary basis earlier this year after he was charged on several counts of insider trading by authorities in Canada.

However, in August, Baazov, who was the driving force behind the company’s purchase of PokerStars and Full Tilt in 2014, stepped down from the position permanently, with Rafi Ashkenazi taking up the role.

Amaya warned there is no assurance that Baazov’s offer or any future bid will result in a completed transaction.

Baazov’s bid comes as Amaya reported significant, year-on-year growth across key finances for the third quarter, with revenue and net earnings increasing.

Total revenue climbed 9.5% to US$270.8 million, while adjusted earnings before interest, tax, deprecation and amortisation (EBITDA) increased 14% to $123.2 million.

Elsewhere, net earnings from continuing operations hiked by 136.4% to $12.5 million, with adjusted net earnings also up 23.1% to just under $85 million.

The third-quarter results place revenue for the year-to-date, through to the end of September, at $845.5 million, an increase of 8.5% on the same point last year.

Adjusted EBITDA is up 12.7% to €376.5 million, net earnings from continuing operations rocketed by 1,988.4% to €90.5 million, while adjusted net earnings also jumped 24.5% to €259.7 million.

“As we have concluded the strategic review process, we are excited to continue focusing on improving the company and our operations,” Ashkenazi said.

“We continued to execute on our four strategic priorities during the quarter as evidenced by our strong performance.

“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 favourite online gaming destination and maximising winning moments for all of our customers.”

Related articles: Amaya cites PokerStars’ success with revenue set to climb in Q3
Amaya confirms Baazov departure