Amaya Inc., the world’s largest publicly listed online gambling company, is looking on major change as competitors seek to bid on a full blown takeover. One company rumored to be joining said takeover is Playtech, a gambling software development company headquartered in the Isle of Man.
Playtech has had talks with other companies about the takeover and subsequent bidding process lately and this has been planned by Amaya’s CEO and chairman David Baazov for some time now. In February of this year he announced that he showed interest in bidding $3.13 USD.
This announcement caused quite the stir in the industry as the implications are naturally significant. While there is no concrete news of Playtech joining the Amaya acquisition as of yet due to a refusal of direct comment, Playtech’s chairman did throw wind to suggest that the company was looking into certain acquisitions.
Playtech is already attempting to acquire a sports betting platform called OpenBet. OpenBet, voted one of the best places to work in the UK according to a 2010 survey, would make a strong addition to Playtech’s assets. This interest certainly lends to the possibility of Playtech taking over Amaya and both additions would certainly improve the monetary value of the company.
Another positive indication of Playtech joining the Amaya takeover is that of eight financial analysts of the Swiss global finance company UBS giving Playtech a “strong buy” rating. What this means is that the company is expected to experience a financial upswing in the near future.
While this is merely analysis, murmurs of a financial takeover have traditionally had a positive impact on all those involved in the process. This only proves to serve as credence to the validity of a takeover bid involving Playtech.
David Baazov is yet to make an official offer but this could all change very soon. And with this change Amaya could indeed become a private entity soon enough.
There are, however, a few risks and hurdles associated with the takeover. One huge hurdle that bidders, including Playtech, will face is that related to Amaya’s $2.6 billion debt and more specifically, restrictions in terms of change of control.
Clauses related to change of control put a limit on any one party from owning more than 35 percent of Amaya’s voting shares. Regulatory filings dictate that this does not apply to David Baazov and Amaya investors, BlackRock Financial Management Inc. and GSO Capital Partners. This complicates things in terms of debt renegotiation and and is something that cannot be avoided.
The other uphill battle that bidders such as Playtech face is litigation related risk. There is ongoing legal action against Amaya in Kentucky with large losses at stake. A judge awarded $870 million in damages to the state of Kentucky in relation to money spent by residents at one of Amaya’s subsidiaries PokerStars.
Amaya is actively appealing said ruling but this type of litigation poses a huge risk for companies like Playtech when it comes to a takeover. If Playtech is actually interested in making moves towards a joint company takeover of Amaya these risks must be accounted for. Risks such as these will decide whether or not this is a worthy financial move.
From a financial perspective Playtech is definitely in the position to consider joining an Amaya takeover. The company as of late has seen positive movement in the financial market and only looks to see even more growth. With a market cap of 2.623 billion GBP Playtech is definitely no slouch.
Playtech is a major player in the arena of online gambling and the evidence along with the raw data is damning concerning the company’s role in an Amaya takeover.