David Baazov certainly knows how to grab the attention of the financial and poker communities. A year and a half after his company, Amaya Inc., announced its intentions to purchase the parent of PokerStars and Full Tilt in a $4.9 billion deal, Baazov has let loose with another shocker: he is now interested in personally buying up all of Amaya’s outstanding shares in a proposal that would value the company at approximately CAD $2.8 (USD $2 billion).
In a press release Monday morning, Amaya announced that “he intends to make an all-cash proposal to acquire Amaya at a price currently estimated by Mr. Baazov to be C$21.00 per common share.”
No formal bid or offer has been made yet; nothing is binding at this point and there is no guarantee Baazov will actually ever officially make the offer to control the entire company and take it private.
Baazov owns 24.6 million shares of Amaya, which amounts to 18.4 percent of the company, as there are 133.426 shares outstanding. He also has options to buy another 550,000 shares. Not counting his options, this means Baazov would need to buy 108.826 million shares of the company. At CAD $21 per share, he will have to come up with CAD $2.285 billion.
The timing is certainly right for Baazov to make such a bold play. In late 2014, the year Amaya purchased PokerStars, the company’s stock price was nearly CAD $39 per share on the Toronto Stock Exchange. It has been a struggle since – on Friday, the stock closed at CAD $14.99, just off its 52-week low.
The surprising news gave a huge boost to the stock price. In the first minute of trading Monday, Amaya shares were up 27 percent. Though the price didn’t stay at that level, it still finished fairly strong, up 20 percent to CAD $18 per share.
At least one analyst feels Amaya is severely undervalued. In a note to investors, Desjardins Capital Markets analyst Maher Yaghi valued Amaya at CAD $28.50 per share.
Alexandre Drefyus, CEO of Mediarex Sports & Entertainment, the company that owns the Global Poker Index and the Global Poker League, thinks this is potentially a great move by Baazov, as going private could allow him to move the business forward without being beholden to shareholders. “While the company is leading the poker market with +70% market-share,” Dreyfus wrote on Linkedin, “the growth of revenue has been limited and paradoxically the ability to invest and innovate into the poker vertical, was clearly limited because the priority was to pay back the debt AND please the analysts.”
“Pokerstars has enough funds to invest, but had the obligation to show analysts immediate return,” he added. “It was impossible to develop a long-term strategy, everything was focus on: Q1, Q2, Q3 and Q4. The management was not driven by long-term approach, but by short term return. It was frustrating. It was legit, but it doesn’t help poker, and those who love that industry.”