Amaya Inc.’s founder, who took an indefinite leave this year amid a Quebec insider trading probe, has made a cash offer to take the Canadian owner of the PokerStars online gambling service private in a deal valued at about $6.7 billion, including debt.
David Baazov said in a U.S. exchange filing Monday that he and his financial backers are offering C$24 for each outstanding common share of the Pointe-Claire, Quebec-based company. That’s 31 percent above Friday’s closing price of C$18.34 in Toronto.
The shares surged as much as 18 percent to C$21.69 Monday, the biggest intraday rise since February.
Baazov is proposing the offer after William Hill called off merger talks with Amaya last month, squelching a deal that would have created the world’s largest online gambling company after U.K. activist investor Parvus Asset Management opposed the union. Amaya said in a statement Monday that it would consider the new offer. Baazov owns about 17 percent of Amaya’s shares, according to the filing.
“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,” Baazov wrote in a letter to the company’s board, the filing shows. “While Amaya incurs the substantial costs and scrutiny associated with being a reporting company, it obtains no benefit from being public.”
Amaya shares rose 5.2 percent this year through Friday.
The latest offer and any definitive agreement reached are not subject to due diligence or financing conditions, Baazov said in the letter. The $4.1 billion equity portion of the offer comprises $3.65 billion in commitments from sponsors and $437 million of Baazov’s own common shares. The group plans to buy $1.15 billion of Amaya’s convertible preferred shares, in addition to common shares, and assume $2.55 billion of debt, the filing shows.
Baazov said he was also prepared to pay $200 million toward a deferred payment the company owes to the former owners of PokerStars, which Amaya bought in 2014.
“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,” Baazov said. “I expect to be able to settle the terms of the definitive agreement quickly.”
Head & Shoulders Global Investment Fund SPC, Goldenway Capital SPC, Ferdyne Advisory Inc. and KBC Aldini Capital Ltd. have agreed to contribute equity to the buyout, according to the filing.
In February, the founder said he was prepared to offer about C$21 a share for Amaya. The company appointed Barclays to advise on a strategic review related to a potential proposal.
“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,” he said in the filing.
In August, Baazov resigned from all positions within Amaya after he became an object of an insider-trading probe by Quebec’s securities regulator, which he said he planned to vigorously contest, calling the allegations false. He took an indefinite leave of absence in March after the charges were made.
Canaccord Genuity Group is financial adviser for Baazov, while Goodmans is offering legal advice, he said.