Amaya CEO on Acquisition of PokerStars: "It Will Transform the Entire Gaming Industry"

Amaya CEO on Acquisition of PokerStars:

Speaking to the 13 Amaya Gaming investors during a conference call held on June 13, Amaya CEO David Baazov said that Thursday's acquisition of the Rational Group represents a "strong deal from a financial perspective" that will "transform the entire global gaming industry."

Baazov expanded on the decision to buy PokerStars and Full Tilt Poker's parent company for 4.9 billion dollars, saying he believes the operation will be completed by Sept. 30, 2014.

The purchase of all the assets of the Oldford Group Limited (the parent company of Rational Group) will lead to the creation of a "global online gaming powerhouse in a large and growing online gaming market, which H2Gambling Capital estimates to grow up to approximately 42 billion dollars by 2018," Baazov said.

With the transaction, Amaya will become the world’s largest publicly-traded online gaming company.

"Rational is the owner of the operators PokerStars and Full Tilt Poker, the two most profitable and powerful online gaming brands," Baazov continued. "Over the past fourteen years, [Rational] has become the world's largest poker business, earning the loyalty of millions of players."

"With the continuing trend of online gaming regulation around the world, the company has in front of itself an enormous opportunity to leverage its brand recognition and customer loyalty to diversify into other gaming verticals as casino, sports betting and social gaming."

According to Baazov, the expansion of Rational's brands in these new verticals could open the doors to "a combined global market of the size of approximately 25 billion dollars," which would be far bigger than the one PokerStars and Full Tilt Poker currently operate in. "Rational's addressable online poker market is of about 4 billion dollars at this time," he said."

Amaya to bring PokerStars and Full Tilt Poker to the United States

As expected, the three new verticals are not the only opportunity that Amaya sees for PokerStars and Full Tilt Poker's future.

"Growth opportunities are not only in new verticals", Baazov explained. "Rational does not currently operate in the United States, and we anticipate that Amaya's track record in the United States has the potential to facilitate a speedier entry of the Rational's brands into the US, an entrance that would certainly be welcomed by players."

Amaya's CEO also explained how he believes that the company's track record and current position in New Jersey will allow Rational's poker brands to soon start offering their products in the state.

"This transaction has the potential to excite US players and bring to the [US] market the world's number one [poker] brand."

A brand new casino client to be launched already in 2014

Baazov also expanded on the real opportunity for Rational's brands to grow beyond poker, thanks to the great work done in the past that allowed the two rooms owned by the Rational Group to achieve the remarkable goal of "over 85 million registered players."

"We intend to support the company growth in real money online casino, sports betting and social gaming," Baazov continued. He also highlighted how the fact that Rational's brands have operated almost exclusively within the poker market is offering great possibilities for future growth.

"[Rational's] companies do not only have the ability to attract new players, but they are also able to offer popular tables and slot games to their millions of players using their poker platforms," Baazov said, while informing the audience that Amaya will add to the current casino games available on Full Tilt Poker.

Yet, the plan to enter the online casino market passes also through a completely new product, as Baazov announced that the company "anticipates providing a full-featured casino client later this year."

During the 30-minute conference call, Baazov explained also how Amaya plans to use PokerStars and Full Tilt Poker to get an important role in the social gaming and the sports betting markets.

"Sports betting is a huge online gaming market estimated at 17 billion dollars in 2013, and the company is planning to enter it in 2015.

"We estimate we can become a strong operator in the market in a few years, keeping the existing online poker players form spending their dollars on other sports book operators."

As for social gaming, Baazov said that "we anticipate social gaming will be an important growth opportunity for the company [since] Rational already has a huge database of play money poker players."

Baazov also mentioned the beta version of PokerStars Play, the Zynga Poker-like social free game Rational has recently launched on Facebook, and added that the product will be developed with a strong focus on the mobile market in mind.

Poker players will be unaffected by the transaction

"The acquisition provides Amaya with a premier gaming platform at an attractive evaluation," Baazov said about the deal that was considered to be 'financially fair' to Amaya by the Deutsche Bank Securities Inc. and the Canaccord Genuinity.

"This is a wonderful combination of Rational's B2C operations with Amaya's B2B business, with a minimal overlap between the two companies."

Speaking about the future structure of both the Oldford Group and Amaya, Baazov explained that "no changes to Amaya's board are planned as a result of this transaction." However, "After closing the deal, Rational's CEO, founders and other principles will resign from the company."

"We anticipate keeping the company's experienced executive management team and staff. Poker players will be unaffected by the transaction and will not see any negative impact in the gaming experience they love.

"I want to thank the dedicated staff of both companies," he concluded, "as well as our financing, consulting and advisory partners who have worked extremely hard to get us to the stage we are at today. I am confident that we will bring this home."

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