Canada-based Amaya Gaming issued a “move along, nothing to see here” statement Monday in response to rumors that have recently sent its stock price soaring upward.
There seem to be two sources to these rumors. One is Industrial Alliance Securities analyst Neil Linsdell, who wrote on May 20th that Amaya may be eager to “‘trade up’ to a larger poker platform.” Amaya currently owns the Ongame Network, which it bought from bwin.party for €15 million ($19.3 million) in the fourth quarter of 2012. According to the terms of the deal, if online poker becomes legalized in the United States within five years Amaya will pay bwin.party up to another €10 million ($12.9 million at the time of the sale). The exact number depends on how many states opt-in to federal legislation and how many people reside in those states.
Amaya also bought Cryptologic, former home of Sun Poker and InterPoker, in early 2012 for $35.8 million. The company sold the WagerLogic portion of the business later that year for $70 million.
So, Amaya certainly has a track record of wheeling and dealing, causing Linsdell’s statement to pique the interest of investors.
The second source of the rumor was an article on CalvinAyre.com on Saturday which said Amaya could be making a play for PokerStars. “As unlikely as it may sound,” the article stated, “sources have told CalvinAyre.com that an agreement is in place that would see Amaya assume ownership of the Isle of Man-based online poker colossus, thereby clearing the way for the Stars brand to return to regulated US markets.”
After the analyst statement about “trading up,” Amaya’s stock price went up from a close of $7.71 on May 16th to a close of $8.42 on May 20th, an increase of 9.2 percent. Today was its first losing day on the Toronto Stock Exchange since then, as it closed at $10.91. All told, Amaya Gaming (AYA.TO) has gained 43.3 percent since May 16th.
Of course, Amaya’s ability to buy PokerStars would be dubious, at best, and likely require some fancy financial wrangling. After this stock run-up, Amaya’s market capitalization is $1.04 billion; considering PokerStars was able to pay the U.S. government $731 million to settle the Black Friday situation and pay U.S. Full Tilt Poker customers back, odds are it is significantly bigger than Amaya, even after Amaya’s giant gains in the past week.
On Monday, Amaya issued a statement about its recent stock performance and the rumors attached to it:
In response to trading activity that may stem from market rumours that have come to the company’s attention regarding a potential strategic acquisition, Amaya Gaming Group Inc. (AYA.TO) stated today that strategic acquisitions have been and are one component of the company’s growth strategy and, as such, Amaya regularly evaluates potential acquisition opportunities. From time to time, this process leads to discussions with potential acquisition targets. There can be no assurance that any such discussions will ultimately lead to a transaction. As a general policy, Amaya does not publicly comment on potential acquisitions unless and until a binding legal agreement has been signed. The company intends to make no further comment or release regarding current market rumours unless and until such comment is warranted.
Obviously, that doesn’t tell us much of anything more than, “Yeah, sometimes we look into things.” Whether or not this PokerStars rumor is true is still to be determined, but it just seems too “out there” to be possible.
