Shares Continue To Trend Higher As Final Closing of Transaction Approaches

Published on 2014-09-08 23:50:00

On Friday, June 13th, 2014, the Amaya Gaming Group officially announced their intention to purchase Oldford Group Limited, the parent company of the Rational Group, which owns and operates Pokerstars and Full Tilt Poker.

Shares of Amaya Gaming Group (AYA on the Toronto Stock Exchange) jumped on June 12th, presumably due to the fact that word of the impending $4.9 billion deal was starting to leak. Shares of Amaya Gaming Group opened on June 12th at $11.93/share and closed at $14.08.

The Amaya/Rational deal was officially announced before the bell the next day and shares of Amaya jumped, opening at $20.12 and closing at $19.95.

Those who believed in the deal and the new company were rewarded - if you purchased shares of Amaya Gaming Group right after the announcement you are likely up over 50% on your investment, as shares of the company closed today at $31.40. That represents over a billion dollars in market capitalization that has been added to Amaya Gaming Group since the deal was announced.

So - why the big run-up after the deal was announced? There are some different possible reasons, including:

1) Amaya's plans for Pokerstars/Full Tilt Poker when the acquisition closes. The addition of casino games and sports betting (sports betting is likely coming in 2015) should help to increase the company's bottom line. The general idea is that Amaya will instantly become one of the world's largest online sports betting operations overnight due to their ridiculously large player pool once they start offering sports betting.

2) Amaya's plans to enter the United States. The old regime at Pokerstars couldn't get into the United States and their opening online gaming markets. There should be no such problem for Amaya and I would expect to hear an announcement regarding New Jersey shortly.

3) Easy regulatory approval and shareholder approval. There were no issues whatsoever and this likely helped to boost shares of the company.

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With shares of Amaya now trading north of $30, the question becomes - is it still a buy?

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