David Baazov, the 36-year old founder and former CEO of Amaya Inc., is leading a collaborative effort to purchase the Montreal-based parent company of PokerStars and take it private.
Citing a recent filing with the Toronto Stock Exchange, the Financial Times reported on November 14th that Baazov has secured financial backing from a pair of Hong Kong-based investment firms as part of a proposed acquisition valued at $6.7 billion including debt.
Of that amount, Baazov and his backers would acquire $3.65 billion worth of outstanding Amaya stock at a price of C$24 per share – or 31 percent higher than the closing price of C$18.34 on the day he issued his filing. Additionally, $1.15 billion would be used to obtain Amaya’s convertible preferred shares, and $2.55 billion more in debt would be assumed.
Baazov currently owns over 24.5 million shares for a 17.2-percent equity stake in Amaya – the online gambling company he founded in 2006 and grew to the point of purchasing PokerStars and Full Tilt Poker in 2014 for $4.9 billion. As part of the proposed deal, Baazov would effectively purchase $437 million of his own shares.
Within the regulatory filing, Baazov penned a letter to Amaya’s shareholders outlining his motivations for pursuing a path towards private ownership:
“As the online gaming industry continues to mature, I believe that it is in the best interests of Amaya to be positioned as a private company. While Amaya incurs the substantial costs and scrutiny associated with being a reporting company, it obtains no benefit from being public.”
“Because of my familiarity with Amaya, I am in a position to negotiate a definitive agreement that need only contain limited representations and warranties, on an expedited basis, thereby reducing any distraction to management. I expect to be able to settle the terms of the definitive agreement quickly.”
Baazov’s stated “familiarity” with Amaya extends back a decade to the company’s founding, but while the former CEO cites this experience as a benefit, the company’s shareholders have reason to disagree.
In March of this year Baazov was charged with five violations related to insider trading by Quebec securities regulator Autorité des Marchés Financiers (AMF), including the crimes of “aiding with trades while in possession of privileged information, influencing or attempting to influence the market price of the securities of Amaya, and communicating privileged information.”
After Baazov announced an extended leave of absence from the company, Amaya board members and executives formed a Special Committee of Independent Directors, a group tasked with “considering any proposal that may be made by Mr. Baazov, as well as other alternatives that may become available to Amaya.”
Baazov resigned all positions with Amaya in August, while vowing to “vigorously contest these false accusations.” In his letter to Amaya shareholders, Baazov made explicit mention of the Special Committee’s inability to identify viable alternatives during the intervening nine-month period:
“The value of the transaction should be particularly compelling to Amaya’s shareholders given that no other viable alternatives were identified during the nine-month strategic review process that was recently completed by Amaya and its advisers.”
Prior to the insider trading allegations going public, Baazov made headlines in February by making a $2 billion cash offer to take the company private.