Amaya offered $3.5 billion takeover deal by former CEO

Published on November 26, 2016 in Industry News

Amaya Inc takeover bidFormer CEO and owner of 17.2% of Amaya Inc., David Baazov has put forward a $3.5 billion takeover proposal for the online gambling company, however his current trouble with the law might make it difficult to close the deal.

Charges were laid against Mr Baazov by Quebec’s securities watchdog, the Autorité des marchés financiers (AMF) earlier this year for illegal insider trading. Baazov pleaded not guilty and took paid leave to fight the AMF charges.
 

Backers and shares

The proposed acquisition of Amaya is backed by four overseas investment firms, namely Head and Shoulders Global Investment Fund SPC of Hong Kong, Goldenway Capital SPC of Hong Kong, Ferdyne Advisory Inc. of the British Virgin Islands and Dubai-based KBC Aldini Capital Ltd. From the four separate funds the proposed acquisition is backed with an estimated $3.65 billion in financing.
 

“David Baazov proposed to lead the $24-per-share offer which will be at a premium of 30.9% of Amaya’s closing price.”

Although stock recently increased by 14.4% it managed to close more than $3 below the offer price. Considering these statistics, it is easy to see why the deal might not go through.

Partner with Bretton Woods Law Canada, Alan Sarhan, spoke out and said that the charges and possible conviction of Mr Baazov could be a problem. Sarhan continued to say that standards need to be adhered too even if the company is taken private.

Amaya’s current chief executive officer, Rafi Ashkenazi told analysts that the company would respond to the offer soon. Amaya confirmed on Monday that they are reviewing if any “improper payments” have been made to foreign government officials by the company or any of the subsidiaries.
 

Improper payments

According to the filing posted on Monday, payments might have been made through the company’s inoperative lottery services business, the obsolete gaming terminals restoration business or via external consultants. Amaya has reported their findings to the US Department of Justice (DOJ), the US Securities and Exchange Commission (SEC) as well as the Royal Canadian Mounted Police.

Improper Payments is a term generally used by companies to describe payments that are bribes or “facilitating payments” that occur when the company pays officials to accelerate something it is already entitled to.

According to Mr Sarhan, Amaya could possibly settle early on deferred prosecution because they communicated with the DOJ and SEC early in the process. Amaya became aware of the possible “improper payments” during their internal investigation following AMF’s insider-trading investigation. Mr Sarhan said that the improper payments issue will be considered by regulators in any takeover scenario.

David Baazov’s spokesperson stated that he is fully aware of the improper payments and that it would not have any effect on his offer. Earlier this year William Hill PLC started talks of taking over the Montreal-based Amaya Inc. but abruptly ended it due to its own internal issues. The company’s board of directors decided it would be best for shareholders if they stay an independent, publicly traded corporation.

Amaya had no additional comments beyond what was disclosed in the regulatory filing.