There have been some major purchases, mergers and acquisitions in the world of online gaming over the years – but it’s hard to think of one that could shake up the Internet gambling landscape as much as this one. The Amaya Gaming Group has announced that they will be purchasing the Rational Group, parent company of PokerStars and Full Tilt Poker, for a price of $4.9 billion.
Technically, the deal is for the Oldford Group – the privately held parent company of the Rational Group. But the end result is the same, turning Amaya into the largest publicly traded online gambling company in the world. The purchase is being made primarily with financing provided by Deutsche Bank, Barclays Bank, Macquarie Capital and a division of Blackstone, with well under $1 billion being immediately paid in cash.
Scheinberg to Leave Company
The deal will see the end of the Scheinberg family’s control of the PokerStars brand. Mark Scheinberg, the CEO and founder of the Rational Group, will be selling the entirety of his shares to a subsidiary of Amaya, as well other Oldford Group shareholders. Once the transaction is complete, Scheinberg and other major Oldford players will be resigning from their positions in the firm and all of its subsidiaries.
But while Scheinberg may be out, Amaya says that this shouldn’t concern current PokerStars and Full Tilt players, who can continue to enjoy their services without interruption.
“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,” said Amaya CEO David Baazov. “Working with the experienced executive team at Rational Group, Amaya will continue that tradition of excellence and accelerate growth into new markets and verticals.”
Deal Could Bring PokerStars Back to US
Those new markets are likely the driving force behind the acquisition. While regulators in the United States have shown little interest in working with PokerStars (and some states have crafted “bad actor” laws to keep the company out of regulated gaming markets), there’s no doubt that it is still the most trusted and recognizable brand in online poker. Under the ownership of Amaya, the brand may be able to find its way back to American shores.
“This could be massive as it should be the key for the PokerStars brand, technology, client lists and expertise all to gain access to the thus far slow-to-take-off U.S. onshore regulated market,” H2 Gambling Capital founder Simon Holliday told Bloomberg.
The move should prove to be a lucrative one for Amaya, which previously had a presence in the online poker market through the Ongame Network. While the company had to take on billions in financing to make the purchase, they expect the significant cash flow generated to allow for rapid debt repayment. The move has been well-received by investors, with Amaya stock rising 77 percent through the close of trading on Thursday and continuing to rise rapidly on Friday.
The purchase of the Rational Group was reportedly first proposed by Baazov nearly a year ago, and is expected to be officially closed by the end of September 2014 pending regulatory approvals.