PokerStars Purchase Approved by Amaya Gaming Shareholders
Canadian online gambling firm Amaya Gaming announced on Friday that it had formally completed its acquisition of PokerStars parent Oldford Group, rapidly bringing to completion a $4.9 billion purchase that instantly makes Amaya the market leader in online poker. The PokerStars purchase marks heady territory for the company and its CEO, David Baazov, with the deal only able to be completed after Amaya shareholders approved the terms of the purchase in its recent annual and special shareholders’ meeting.
“We are extremely pleased to have completed this Acquisition,” said Baazov, in a prepared statement. “Through PokerStars, Full Tilt and its multiple live poker tours and events, Rational’s brands comprise the world’s largest poker business, generating diversified and recurring revenues across the globe from its extremely loyal customer base.
Similarly polished text came from the PokerStars side. Said Rational Group (part of Oldford Group) CEO Mark Scheinberg, “Since launching PokerStars in 2001 we have grown the business each year thanks to constant innovation, unparalleled customer service, and the talent of our dedicated workforce. While myself and other founders are departing, we are happy to see the business and the brands we have developed, along with the teams behind them, transferred to strong new ownership. I’m confident that Amaya, together with Rational Group’s leadership, will continue to successfully grow the business into the future.”
According to the terms of the deals, Scheinberg and other remaining owners of the private entities that comprised the greater PokerStars family receive:
- $50 million initial deposit — paid in June upon announcement of the deal;
- $4.45 billion in cash, which is now due as soon as the pre-arranged financing of the deal is completed;
- $400 million in a deferred closing payment, which is now scheduled for distribution in early 2017.
As stated, the financing package that allowed this minnow-swallowing-the-whale acquistion to proceed had already been hammered into place. Here’s how Amaya pays for instantly becoming the world’s online poker leader:
- $2.9 billion in major financing packages from major international/US banks — Deutsche Bank, Barclays and Macquarie Capital;
- $1 billion through the issuance of a new class of Amaya Gaming preferred stock. At least $870 million of the $1 billion to be issued in preferred shares has already been spoken for. From an Amaya corporate statement last month, GSO Capital Partners LP, part of The Blackstone Group will buy $600 million in convertible preferred shares, and an unnamed investment manager will purchase another $270 million in preferred stock. Both of the above will also make additional common-stock purchases.
- $500 million through placement of existing Amaya common stock already held by the company itself.
That makes up the $4.4 billion of the current cash buyout beyond the initial $50 million deposit, leaving Amaya to pay the deferred closing payment in 2017 from the presumptive profits of the long-running operation.
Amaya gets several properties in addition to PokerStars, including Full Tilt Gaming, the European Poker Tour, Latin American Poker Tour, Asia-Pacific Poker Tour and the PokerStars Caribbean Adventure. Other secondary properties that are part of the greater PokerStars family are included as well.
Much of the attention since the sale’s announcement in June has been the prospect of Stars’ re-entry into the US online-gaming market. That will probably occur first in New Jersey, where the state’s gaming officials have reactivated the formerly suspended PokerStars application as a service provider. New Jersey Division of Gaming Enforcement (DGE) spokesman have indicated that the true sale of the company to Amaya removes the stigma that surrounded Rational CEO Mark Scheinberh and his father Isai, who co-founded Stars over a decade ago.
The elder Scheinberg officially remains a fugitive from US justice in connection with the “Black Friday” US crackdown on online poker. PokerStars itself reached a financial settlement with the Department of Justice in 2012 while admitting no wrongdoing.
However, it may have been the quick approval of the deal by European gaming regulators that gave Amaya rank-and-file shareholders the confidence to quickly approve the deal. French gaming regulator ARJEL announced its approval two weeks ago, as did Isle of Man gaming regulators, where PokerStars and corporate parent Rational Group are currently based. As part of the deal, Amaya announced that Stars’ experienced staff would remain in place. It’s no doubt a multi-faceted comfort to both Isle of Man gaming officials and the island’s own isolated economy.
Baazov himself received a resounding reelection as the Chairman and CEO of Amaya, receiving over 99% of the shareholder vote, the highest total among all returning board members. His ability to quickly put the deal together in the face of multi-jurisdictional and regulatory hurdles is part of why PokerStars may indeed be returning to the US market sooner rather than later, where it may help revive an online poker industry that’s struggled to gain ground since its post-Black Friday official regulation. The PokerStars purchase ranks as the largest financial deal in online poker history, and will likely reshape the global game.
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