Shares of both Amaya and Intertain fell sharply Friday after news of the raid on Amaya, Canaccord, and Manulife Financial broke late Thursday evening. Amaya issued a statement that the actions were related to trading activities in its shares around the acquisition of Oldford Group, which owned the Poker Stars and Full Tilt Poker brands.
Thadani says the raid on Amaya, which owns 1.9-million shares of Intertain and is its largest shareholder, has no implications for Intertain’s existing business, nor for its pending acquisition of Vera and John.
In October, Intertain announced it would acquire Dumarca Holdings Ltd., the Malta-based parent company of online casino player Vera&John group, which generated €4.6 million of EBITDA on revenue of €25.9 million in 2013. The company said it would pay as much as up to $126.1-million for the company, depending upon milestones related to EBITDA.
Intertain today issued a press release this morning which read, in its entirety:
“The Intertain Group Ltd. feels it is necessary to comment on the trading activity in its common shares today. The company became aware through news reports of the investigation by the Autorite des marches financiers (AMF), Quebec’s securities regulatory authority, regarding certain trading activities of Amaya Gaming Group Inc. Intertain stated today that it is not aware of any connections to Intertain of the investigation, and it has not been contacted by any security regulatory or law enforcement authority.”
Thadani says Intertain’s value proposition is now particularly strong.
“Intertain now trades ~8.4x EV/EBITDA on a pro forma 2015 and 2016 basis after giving effect to the recent Vera&John acquisition,” he says. “Most online gaming providers are trading in the ~8–14x forward EV/EBITDA range”.
In a research update to clients this morning, Thadani maintained his “Buy” rating and $17.00 one-year target on IT.
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Hmm .. what if Amaya gets slapped with a huge fine and has to sell Intertain shares in a hurry? Didn't think of that, hero Thadani, now did you?