In 2014, David Baazov wrangled together some of Wall Street’s most-powerful investment groups to buy PokerStars and Full Tilt Poker for $4.9 billion. Fast-forward to 2016, and the investment hasn’t paid off for many involved. PokerStars’ parent company, Amaya Gaming, has seen its shares fall from a peak of $37.52 a year ago to $13.73 recently.
Given the current price, Baazov and a group of investors feel confident that they can buy shares from other owners at $21 per share. If they succeed, they’d make PokerStars a private company again, much like it was under its old owners (Rational Group).
According to News1130.com, Baazov owns 18.6% of the outstanding 132.78 million shares. Including the stock that Baazov already owns, Amaya is only valued at $2.79 billion today, $2.1 billion less than the purchase price.
Maher Yaghi of Desjardins Capital Markets believes that Baazov’s reported offer of $21 per share is quite a bit lower than his fundamental valuation of $28.50 per share.
“While some could see the offer as potentially being opportunistic, it is worth pointing out that the continued strength in the U.S. dollar is a potential headwind for the company’s European poker business,” Yaghi wrote.
Valuing Amaya is no doubt a tricky situation, especially with the uncertain waters that online gaming as a whole is headed towards. PokerStars still commands over 70% of the world’s online poker market, however, this market continues to shrink every year. So naturally, Amaya has begun experimenting with other forms of gaming like Spin & Go’s, casino games and sports betting. It remains to be seen whether or not all of this will make PokerStars better in the long term. However, Baazov must feel that he can improve the business by purchasing it and privatizing Amaya.