The recent developments at the business end of PokerStars indicate growing instability inside the company. Although the company has been performing well at public front which includes New Jersey launch and several measures to add recreational players, the top management hasn’t been able to run the company smoothly.
The latest incident of the CEO Mr. David Baazov being charged for Insider Trading by the Autorité des marchés financiers (AMF) has come as a big blow to the company. The uncertainty deepened with the announcement of Baazov taking a voluntary leave of absence for an indefinite period of time.
The announcement states:
“… Chairman and Chief Executive Officer, David Baazov, is taking an indefinite paid leave of absence from the company, effective yesterday. Mr. Baazov is taking this leave voluntarily to focus on preparing an offer to acquire Amaya and to avoid a distraction for the company while he responds to certain allegations made against him by the Autorité des marchés financiers (AMF), the securities regulatory authority in Quebec. Mr. Baazov will remain a member of Amaya’s board of directors.”
Impacts on Current and Future Plans
This news has made dent in the reputation of world’s largest online poker operator throwing many ambitious plans in a dark box. Last month, the CEO Baazov had proposed to take over the company in a full cash settlement and take the company private to operate focusing on poker developments. However, with Baazov not in chair, this proposal bid appears to be automatically discarded. In this regard, the Special Committee formed by the company had, prior to the charges being brought by the AMF against Mr. Baazov, instructed its financial advisor, Barclays Capital Canada Inc., to begin contacting other parties who might be interested in a transaction involving Amaya.
Looking at the share performance of Amaya Inc. over past one year depicts the volatility in the company’s business. It seems that a bumpy ride is awaiting PokerStars and Amaya in near future with an amalgamation of all such factors.
This incident may put a break on few other important proceedings which includes:
- The online gaming license procured by the company in New Jersey which still is in a temporary state may not materialize to be permanent one.
- The lawmakers and regulators in Pennsylvania, New York or other states who would have considered the gaming license bill on the lines of New Jersey may get a negative feeling about the company and online poker as whole.
- Many other policies of Amaya and PokerStars which also includes merger of Full Tilt and making one brand.