Former Amaya, Inc. CEO David Baazov has ended his bid to purchase his former company and take it private. His offer was for CAD $24 per share, a 30 percent premium over Amaya’s stock price on November 11th, the date the offer was made. The total deal would have been worth nearly CAD $3.5 billion.
In a micro-statement on Tuesday, Amaya confirmed that the deal was off, saying, “Amaya Inc. (NASDAQ: AYA; TSX: AYA) confirmed today that discussions with its former Chief Executive Officer, David Baazov, regarding the offer to acquire Amaya by an entity to be formed, have terminated.”
Baazov also issued a statement to the media, explaining, “It became evident that the share price premium demanded by certain shareholders exceeded the price at which my investors and I would be willing to complete a transaction.”
It seems that the mention of “certain shareholders” might be a reference to SpringOwl Asset Management’s CEO Jason Ader, who wrote a letter to Amaya’s current CEO earlier this month objecting to Baazov’s offer, even going so far as to encourage the company to stop associating with its former boss altogether.
In the letter, Ader was very critical of Baazov himself, citing the insider trading scandal of which Baazov is currently the center and a $870 million judgment against Amaya in the Kentucky domain name seizure case, among other reasons.
The insider trading case goes back to when Amaya bought PokerStars parent Rational Group for $4.9 billion in June 2014. In March of this year, the Autorité des marchés financiers (AMF), Quebec’s financial regulator charged Baazov and others with insider trading, saying he engaged in “aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of the securities of Amaya inc., and communicating privileged information.”
Baazov took a look of absence from Amaya shortly after the charges were made and eventually resigned in August.
In September, the AMF further accused Baazov and his cohorts of directing a kickback scheme to reward each other for insider information which led to trading profits. Kickbacks consisted of things like cash, checks, a $13,000 Rolex watch, and even allegedly a ten percent profit distribution for the people involved in the PokerStars acquisition.
When the announcement was made earlier this week that the deal had fallen apart, Amaya’s share price tumbled before the market’s open. On Monday, Amaya’s stock closed at USD $14.45 per share, but opened on Tuesday at USD $13.40, a drop of more than 7 percent. But as often happens, it rebounded over the course of the day, finishing at USD $14.25, down less than 2 percent.
Even though Baazov seemingly took a shot at Ader in his statement, it almost certainly wasn’t just Ader who didn’t like the deal. Beyond the dubiousness of Baazov’s involvement, the funds to buy Amaya were coming from an odd web of foreign investors. It would have been a complicated, highly leveraged transaction and was probably not worth the risk.
