Amaya Gaming acquires Chartwell Technologies: The Facts

Analyst Ralph Garcea has chosen Amaya Gaming as the TSX Venture Canadian Tech Stock of the Year, and CEO David Baazov as Exec of the Year. Cantech Letter will announce the TSXV finalists this week.

The balance sheet of David Baazov's Amaya Gaming will soon be significantly stronger. Amaya today announced plans to acquire Chartwell Technology, which possessed more than $15 million in cash, with no debt.

In a deal that will see beleaguered gaming company Chartwell Technologies (TSX:CWH) delist from the TSX, Pointe-Claire Quebec’s Amaya Gaming (TSXV:AYA) has agreed to purchase the Calgary based company for just under $23 million. Chartwell, which makes Internet-based casino games, has struggled of late. The company’s revenue was almost halved between fiscal 2007 and 2010, from $20.73 million to $11.97 million.

Shares of Chartwell hit a high of $3 dollars in late summer 2008, but fell as low as $.62 cents November of last year as the company struggled to replace lost revenue and battled currency charges.

Chartwell shareholders will receive $87.5 cents plus one-eighth of a common share of Amaya in exchange for each Chartwell share. The deal represents a 69-per-cent premium to the weighted average trading price of the Chartwell shares for the thirty trading days ended May 11, 2011. The merger is subject to a meeting of Chartwell shareholders expected to take place in July, and the receiving of a final fairness opinion from Evans & Evans, but has been unanimously approved by the Chartwell board.

Amaya, although smaller than Chartwell, possesses something that Chartwell has lacked for some time; sizzle. Shares of Amaya have nearly tripled since last summer, to close at $2.95 today. The company, which was founded in 2004 and IPO’d on the TSX Venture Exchange this past summer has, in the past, designed electronic table games that allow players to remotely play Majong, bingo or horse racing.

But Amaya really took off when it announced, earlier this year, that it had secured a license from the Betting Control and Licensing Board of Kenya to operate on-line gaming. Amaya’s SMS Lotteries allow users to purchase lottery tickets from their phones and charge directly to the users mobile account. The Kenyan license comes on the heels of similar agreements in Uganda and the Dominican Republic.

Chartwell, which will operate as a wholly owned subsidiary of Amaya, significantly strengthens the new parent company’s balance sheet, as it had more than $15 million in cash and short term investments and no long term debt.

Shares of Chartwell were up 34% today, to $1.10, Amaya was up a penny to $2.95.