The proposed merger between Amaya and U.K.-based betting firm William Hill is good news for Intertain Group (Intertain Group Stock Quote, Chart, News: TSX:IT), says Mackie Research Capital analyst Nikhil Thadani.
On Friday, Amaya and William Hill confirmed they are in discussions about a merger. In a press release, Amaya said the combination of the two would “create a clear international leader across on-line sports betting, poker and casino.” Shares of Amaya were up sharply Friday as rumours swirled.
Thadani says that while the flurry of M&A activity in the gaming space is a positive for Intertain, Amaya being in play is of particular relevance.
“(A) potential Amaya bid reflects trapped value in Canadian listed online gaming stocks. IT trades in sympathy with bellwether Amaya. A potential bid for Amaya, should bode well for IT’s valuation,” says the analyst. “With IT seemingly set to commence trading in London, we expect IT’s valuation to benefit due to proximity to a developed online gaming investment ecosystem, which has witnessed very active M&A.”
In a research update to clients today, Thadani maintained his “Buy” rating and one-year price target of $20.00 on Intertain Group, implying a return of 83 per cent at the time of publication.
Thadani thinks Intertain will generate EBITDA of $171.5-million on revenue of $489.5-million in fiscal 2016, numbers he expects to climb to EBITDA of $185.4-million on a topline of $510-million the following year.
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