PokerStars owner Amaya to stay independent after merger talks end without deal
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MONTREAL — Following the collapse of merger talks with a British betting company, Amaya Inc. (TSX:AYA) says it's pursing options for making a US$400-million deferred payment related to its purchase of the PokerStars online gambling business in 2014.
The Montreal-based company is due to make the payment on Feb. 1, 2017, as part of its acquisition of the Rational Group — and several gaming brands including PokerStars — for US$4.9-billion.
Amaya said Tuesday that it's pursuing "various non-dilutive options" to supplement its cash resources, including excess cash flow from operations and about US$99 million of unrestricted cash on its balance sheet as of Sept. 30.
Earlier, British betting company William Hill PLC and Amaya announced they had called off merger talks that they disclosed earlier this month amid reports that a possible deal was in the works.
"After canvassing views from a number of William Hill's major shareholders, the board has decided that it will not pursue discussions with Amaya," the British bookmaker said Tuesday.
Divyesh Gadhia, chairman of Amaya's board of directors, said the company evaluated a wide range of strategic alternatives to maximize shareholder value and concluded that remaining an independent company is in the best interest of Amaya's shareholders.
"Amaya is a strong and growing company with experienced management and a proven strategy to deliver profitable growth and shareholder value," Gadhia said in a statement.
Amaya's independent directors have been reviewing strategic alternatives since February, after founder David Baazov indicated he wanted to buy out other shareholders and take the company private.
Since then, Baazov has been charged with five offences including communicating privileged information and attempting to influence the market price of Amaya stock. Baazov and two associates have pleaded not guilty.
Amaya said Tuesday that Baazov has said he's still interested in taking the company private but he hasn't made an offer. The board said it would consider a bona fide offer from any party but its review of strategic alternatives has concluded.
Amaya shares were down C$1.59 or nearly eight per cent at C$18.74 in trading on the Toronto Stock Exchange.
Its comments on the deferred payment were included in a preliminary and partial financial report issued before stock markets opened Tuesday, but after William Hill announced that it was no longer pursing a deal.
Amaya said it expects to generate between US$1.127 billion and US$1.157 billion of revenue in 2016 — slightly below an estimate of US$1.173 billion compiled by Thomson Reuters.
Amaya's preliminary estimate for the third quarter, ended Sept. 30, is for between US$268 million and US$273 million of revenue. It didn't release earnings estimates Tuesday and said a full report will be issued Nov. 14.