In a move that has created the largest publicly traded online gambling company in the world, the Amaya Gaming Group has agreed to the purchase of the Rational Group, the parent company of PokerStars and Full Tilt Poker. The purchase price came to $4.9 billion, for which Amaya acquired 100 percent of all outstanding shares of the Oldford Group Limited – the parent company of the Rational Group.
The result is that Amaya is now in control of the world’s largest online poker site, as well as another major brand in Full Tilt. The Canadian firm was already the owner of the Ongame Network, which it purchased from bwin.party in 2012. The boards of directors of both Amaya and Oldford approved the sale unanimously.
According to a press release announcing the acquisition, the deal will see the Oldford Group shareholders, led by founder and CEO Mark Scheinberg, dispose of all of their shares in the companies “to a wholly owned subsidiary of Amaya.” Scheinberg and other associates will also be resigning their positions from Oldford, Rational and all subsidiaries.
No Interruptions for PokerStars, Full Tilt Players
However, players at both PokerStars and Full Tilt Poker should expect no interruption or immediate changes in the services offered. The executive management teams at both sites will be retained, “with players continuing to enjoy uninterrupted access to their gaming experience,” the press release said.
“I am incredibly proud of the business Isai and I have built over the last 14 years, creating the world’s biggest poker company and a leader in the iGaming space,” Mark Scheinberg said. “Our achievements and this transaction are an affirmation of the hard work, expertise and dedication of our staff, which I am confident will continue to drive the company’s success. David Baazov has a strong vision for the future of the Rational Group which will lead the company to new heights.”
Deal Could Allow PokerStars Brand Into U.S. Markets
In the press release, Amaya says that they believe the acquisition “will expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the USA.” That will be seen by many as the primary reason for the purchase: Amaya may now be able to use the powerful PokerStars brand in Nevada, New Jersey and other future regulated American markets, without having the baggage that the Rational Group dealt with because of their activities in the country after passage of the UIGEA regulations. Many states have incorporated “bad actor” clauses in proposed online gambling legislation, with the Rational Group often complaining that they only served to keep PokerStars out of the market.
“Mark Scheinberg pioneered the online poker industry,” said Amaya CEO David Baazov. “Working with the experienced executive team at Rational Group, Amaya will continue that tradition of excellence and accelerate growth into new markets and verticals.”
Share Offerings, Credit and Loans Used to Finance Purchase
Even for Amaya, a $4.9 billion purchase price is a heavy burden. While a small percentage of that sum is being paid in cash, most of the purchase is being financed. A total of $2.9 billion is coming from secured credit facilities and loans underwritten by Deutsche Bank, Barclays Bank and Macquarie Capital. Another billion will be raised through the issuance of convertible preferred shares, while C$500 million ($460.5 million) will be raised by issuing subscription receipts that will later be converted to common shares.
Amaya believes that the significant cash flow that the combined companies will generate should allow them to quickly repay their debt while still allowing the company to grow in the future.