Amaya, PokerStars’ parent company, has received an all-cash offer of CAD$3.48 billion ($2.56 billion) from its founder and former CEO David Baazov.
According to a statement from Amaya, Baazov and four financial investment firms are offering roughly $17.70 per share, a considerable premium on the stock that closed last week on NASDAQ at $13.60.
Along with taking on the Canadian-based company’s current debt, Baazov’s offer with transaction costs is valued at $6.7 billion. Amaya says its Board of Directors and financial advisors will review the proposal.
Baazov founded Amaya in 2004 as a business-to-business gaming supplier. Headquartered in Quebec, Amaya became one of the largest and most well-known players in digital interactive gaming when it acquired PokerStars and Full Tilt Poker in June of 2014 for $4.9 billion.
The largest online poker network in the world, PokerStars made its way back to the United States in March after New Jersey licensed the company for play.
In a letter to Amaya, Baazov writes, “While Amaya incurs the substantial costs and scrutiny associated with being a reporting company, it obtains no benefit from being public. The burden of reporting company disclosure obligations, combined with the short term and volatile nature of the capital markets, impedes Amaya’s ability to pursue its growth strategy.”
William Hill and Amaya abandoned merger talks last month after prominent investors voiced opposition to the union.
Baazov’s statement about the difficulties in being a publicly traded company is perhaps surprising to some market observers. The former Amaya boss is currently still under investigation by the Quebec government’s financial securities arm on allegations of insider trading.
Soon after New Jersey approved Amaya’s application to operate PokerStars in the state, Quebec’s Autorité des Marchés Financiers announced a probe looking into whether Baazov shared private information with outside investors for his own personal financial gain.
Baazov has maintained his innocence and says he looks forward to clearing his name. But the black eye has cast additional shadows over PokerStars.
Labeled a “bad actor” for operating between 2006 and 2011 in the United States following the passage of the Unlawful Internet Gambling Enforcement Act of 2006, PokerStars’ credence was only recently restored in the minds of regulators and politicians.
Public companies are more transparent due to financial securities laws and the requirement to publish financial statements to shareholders.
Should Amaya accept Baazov’s bid, it would become the only private company legally offering internet poker in New Jersey. The World Series of Poker, 888poker, and partypoker are all owned by publicly traded entities.
If Baazov gets his way, the lack of transparency could hurt PokerStars’ chances of being welcomed in the all-important state of California. The Golden State legislature is expected to soon resume online poker discussions, but some Native American tribes want PokerStars banned.
Numerous tribal leaders believe the network’s operation during the five-year period in question unfairly allowed it to gain a substantial following in the US. If online poker becomes legal, they want to offer their sites without the worry of PokerStars taking over the market.