The Canadian Press - ONLINE EDITION

Montreal's Amaya Gaming wins jackpot with US$4.9B deal to become online leader

  • Print

MONTREAL - Amaya Gaming Group announced a jackpot of a deal Friday as the Montreal-based company said it will pay US$4.9 billion in cash to buy the world's largest online poker company, operator of popular brands PokerStars and Full Tilt Poker.

Amaya (TSX:AYA) said it will buy the Oldford Group, parent company of the Rational Group Ltd., whose poker brands have more than 85 million registered players on desktop and mobile devices and which has dealt more than 100 billion poker hands since launching 14 years ago.

``We believe the combined company will be a global online gaming powerhouse in a large and growing global online gaming market,'' Amaya founder, chairman and CEO David Baazov said Friday during a conference call.

Shares of Amaya soared more than 40 per cent Friday, peaking at $20.20 but were down 72 cents or 3.58 per cent at C$19.24 Monday morning on the Toronto Stock Exchange.

The online gaming market is estimated to grow by more than US$13 billion to reach US$42 billion by 2018.

The companies together had US$1.27 billion of revenues in 2013, with Amaya accounting for just US$145 million. Together they had combined adjusted pre-tax operating income (EBIDTA) of US$474 million, which is expected to grow this year to between US$600 and US$640 million.

The deal followed a year-long courtship that is expected to ease Rational's entry into the United States, which has been under a cloud because of the legal problems facing executive Isai Scheinberg.

Scheinberg, a Canadian citizen who has lived on the Isle of Man for about a decade, remains under indictment in the U.S. after being accused along with 10 other online gambling executives in 2011 of bank fraud, money laundering and illegal gambling. They were accused of breaking a 2006 Internet gambling law that prohibits companies from accepting payments for online bets where they are not legal.

PokerStars agreed in 2012 to pay US$731 million to settle Justice Department charges, without admitting wrongdoing.

"Isai's legal representatives remain in close contact with the Department of Justice and we are hopeful of a resolution of this case," a spokesman for Isai wrote in an email.

However, several states have since moved to legalize Internet betting. Nevada, Delaware and New Jersey were the first, with California, New York, Texas and other states expected to join the list.

Amaya's relationships with state regulators as a seller of slot machines, was well as having top advisers such as retired U.S. Gen. Wesley Clark, are expected to ease the entry into the large U.S. market.

``We anticipate Amaya's track record in the United States has the potential to facilitate a speedier entry into the U.S. for Rational's brands,'' Baazov told analysts.

Analyst Ralph Garcea of Global Maxfin Capital Inc. said the deal provides a ``clean solution'' for PokerStars to enter the U.S. market.

Scheinberg and his son, CEO Mark Scheinberg, still have a ``bad actor label'' which should be removed because of Amaya's standing with regulators, he said.

Garcea also noted the transaction is the third great deal done by Amaya, following the purchase of slot firm Cadillac Jack in 2012 and of casino gaming and lottery designer and manufacturer Diamond Game Enterprises earlier this year.

``This just redefines the company and gives them an online global poker presence that's unmatched,'' he said in an interview.

``There's a rich history in Canada (of game development) and it just so happens now one of the largest players in the world is going to be out of Montreal.''

Amaya said the change in ownership will be ``seamless'' for consumers since key Rational management will remain with the company. However, the analyst said the transaction allows Amaya to cross-sell its casino and interactive games on Rational's popular platforms.

Its next gaming frontiers are online casinos, sportsbook and social gaming, which have a combined global market potential of more than US$25 billion.

``With online casino and sportsbook added to online poker, the company will truly become a one-stop shop for gaming,'' said Baazov.

Amaya offers gaming products and services including casino, poker, sportsbook, platform, lotteries and slot machines. Amaya says some of the world's largest gaming operators and casinos are powered by its services.

The Rational Group, based in the low-tax Isle of Man off the coast of Britain, is also a producer of live poker events and poker programming for television and online audiences. It employs more than 1,700 people globally.

The boards of both companies have unanimously approved the agreement, expected to close around Sept. 30.

Baazov and several other Amaya shareholders that control about 28 per cent of the company's common shares have entered into agreements supporting the transaction, which has a break fee of at least US$50 million.

Amaya's annual meeting has been delayed until July 30, when shareholders will vote on the creation of a new class of convertible preferred shares that are part of the transaction.

The purchase will be funded with US$2.9 billion of debt, US$1.6 million equity and the rest from cash.

Credit facilities are being provided by Deutsche Bank, Barclays Bank and Macquarie Capital and GSO Capital Partners, the credit division of The Blackstone Group (NYSE: BX). A syndicate of underwriters include Canaccord Genuity Corp., Cormark Securities and Desjardins Capital Markets.

Note to readers: This is a corrected story. A previous version moved June 13 gave the wrong country in which Scheinberg resides and the wrong first name for Scheinberg's son.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes


  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.


Make text: Larger | Smaller


Maria Aragon performs new single "Nothing but a Beat"

View more like this

Photo Store Gallery

  • Perfect Day- Paul Buteux walks  his dog Cassie Tuesday on the Sagimay Trail in Assiniboine Forest enjoying a almost perfect  fall day in Winnipeg- Standup photo – September 27, 2011   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • A baby Red Panda in her area at the Zoo. International Red Panda Day is Saturday September 15th and the Assiniboine Park Zoo will be celebrating in a big way! The Zoo is home to three red pandas - Rufus, Rouge and their cub who was born on June 30 of this year. The female cub has yet to be named and the Assiniboine Park Zoo is asking the community to help. September 14, 2012  BORIS MINKEVICH / WINNIPEG FREE PRESS

View More Gallery Photos


Should panhandling at intersections be banned?

View Results

View Related Story

Ads by Google