The Stars Group, recently re-branded from Amaya Inc., could raise up to $2.5 billion for future acquisition deals, CEO Rafi Ashkenazi revealed in a Monday interview cited by Reuters. The Canadian gambling giant, which recently switched its Montreal-based corporate headquarters with a new building in Toronto, has been looking to expand its business both through organic growth and M&A activity.
As reported by Reuters, The Stars Group currently has cash of about $255 million and has managed to slash its debt my half a billion dollars within the course of a single year. As a result, it now has the confidence to delve in the international merger and acquisition field and potentially come upon a suitable partner.
Mr. Ashkenazi said on Monday that his company has already entered merger and acquisition talks with other gambling companies but has not revealed their names. Given the Canadian group’s previous interest in buying major UK bookmaker William Hill, it would not be a surprise if the two companies have renewed their mutual courtship from last fall.
Being the owner of PokerStars, the world’s largest online poker room, online poker is currently The Stars Group’s flagship product. However, the company is also looking to extend its footprint across other industry segments, including online casino and sports betting. It made its first forays in the latter two fields several years ago with the addition of online casino games and the introduction of its own sports betting brand BetStars.
Many believe that the gambling giant will be looking to join forces with companies that have significant sports betting and casino gaming experience.
The UK Government recently confirmed that it would crack down on the highly controversial fixed-odds betting terminals located in betting shops around the country. It is yet to be determined what the pending clampdown will involve exactly, but it is expected to trigger a new wave of gambling merger and acquisition deals.
The changes in FOBTs regulations will occasion huge revenue losses to bookmakers with presence in the UK retail market, and such operators will be the likely participants in the renewed M&A wave as they will be in a great need of stability to survive the heavy regulatory blow.
The Stars Group’s Previous M&A Activity
As mentioned above, it was last fall when The Stars Group (then Amaya) entered takeover talks with William Hill. A combination between the two gambling companies would have created a £5-billion powerhouse with operations in regulated jurisdictions across several continents and across all verticals and sectors of the industry.
However, many did not believe in the deal’s potential, including William Hill’s main investor Parvus Asset Management. The hedge fund eventually toppled the deal, arguing that it could not support a move that was based on “risk, debt, and hope”. Amaya’s debt amounted to around $3.5 billion at the time and Parvus feared that William Hill would be burdened with that heavy burden at a time when it was struggling to improve its own profitability.
However, The Stars Group’s debt has been reduced significantly since then, so it might be deemed a suitable partner for William Hill.
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