Provider Amaya Gaming Group has agreed to acquire PokerStars parent company Rational Group for $4.9bn.
The deal will see Amaya become the world’s largest publically-traded online gaming company.
Under the terms of the transaction shareholders of Oldford Group, the parent company of Rational Group, including company founder and CEO Mark Scheinberg, will dispose of their shares to a wholly-owned subsidiary of Amaya.
Rational Group’s executive management team will be retained and the online poker operations of PokerStars and Full Tilt Poker will not be affected.
The deal will combine Rational Group’s B2C poker business, live poker tours, and online and TV poker programming with Amaya’s B2B interactive and physical casino and lottery gaming solutions.
Amaya believes the transaction will expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the USA.
The transaction will be financed through a combination of cash on hand, new debt, a private placement of subscription receipts, a private placement of common shares and a private placement of non-voting convertible preferred shares.
The combined pro forma revenue of Amaya and Oldford Group for calendar year 2013 was $1.3bn, while the projected pro forma adjusted EBITDA for 2014, assuming the transaction is completed as of 1 January 2014, is between $600m and $640m.
Amaya CEO David Baazov said: “This is a transformative acquisition for Amaya, strengthening our core B2B operations with a consumer online powerhouse that creates a scalable global platform for growth.”
Mark Scheinberg added: “The values and integrity which have shaped this company are deeply ingrained in its DNA.
“David Baazov has a strong vision for the future of the Rational Group which will lead the company to new heights.”
Commenting on the probable impact on the wider industry, analysts at Morgan Stanley said: “It seems likely to us that this proposed deal would lead to a significant increase in competition for BwinParty and 888’s European casino and poker products.
“Amaya believes that the deal would ‘expedite the entry of PokerStars and Full Tilt Poker into regulated markets’ suggesting that it is confident that it would be able to expand into the US. While this should expand the nascent US online gambling market, we believe there are negative implications for market shares for the existing operators.”