Amaya Takes a Hit After Baazov Backer Cries Foul

November 23rd, 2016 | by Brian Corlisse

Amaya’s shares drop after one of David Baazov’s supposed backers denies being part of a takeover deal. (Image: Forbesindia.com)

Former Amaya chief executive David Baazov could be in hot water again after news emerged that a major investment bank isn’t involved in his takeover talks.

Earlier in November, Baazov submitted an official proposal to purchase Amaya. The $6.7 billion offer valued each share in the company at $24, which was $3 more than the market value when the bid was made.

Baazov and the Phantom Backer

To fund the takeover bid, Baazov was using a combination of his own stake in Amaya (17 percent) as well as a consortium of private and corporate investors.

News of the plan, which would see Amaya become a private entity, caused a spike in the company’s share price.

Unfortunately, one of the threads holding the deal together appears to be loose or, as the case may be, nonexistent. According to report by the Globe and Mail newspaper, Dubai-based investment firm KBC Aldini Capital is not part of the deal.

In the original report outlining Baazov’s bid and backers, KBC’s CEO Kalani Lal was named as one of those in support of the deal. But, in a statement to Globe and Mail, Lal has denied any agreement is in place.

“I don’t know who Amaya is. We have not given any commitment, nor have we had any discussions or any type of verbal communication,” Lal told the newspaper.

Could there be Trouble Ahead for Baazov?

As well as denying any involvement in the bid, KBC has also lodged a complaint with Amaya’s US business regulator, the Securities and Exchange Commission (SEC). At present neither SEC nor Baazov have commented on the issue, but the market has responded unfavorably to the news.

During trading hours on November 22, Amaya’s share price fell by 6 percent before rallying slightly to open to a price that was down by 1 percent on November 23. Beyond the stock market’s reaction, the issue may not bode well for Baazov’s bid.

Baazov is already under investigation by Quebec’s Autorité des marchés financiers (AMF) for insider trading charges linked to Amaya’s purchase of PokerStars. If it transpires that he’s attempted to deceive Amaya’s board in some way by overstating his level of financial backing, it could heap yet more pressure on him.

Not only that, but if Amaya were to accept Baazov’s offer and he took charge of PokerStars’ parent company, it could call into question his credentials as a business leader. With US regulators taking an unforgiving approach to any senior executives with less than clean records, there’s a chance Baazov’s reputation could cause issues further down the line.