Amaya agrees to buy Cryptologic in $36m cash deal

Amaya has agreed to acquire online casino pioneer Cryptologic for a cash sum of US$36m and now has 28 days to formalise the deal with shareholders.

The deal marks the second acquisition for the Canadian software supplier after buying Chartwell for £14.5m in May 2011 and rebranding as Amaya at the beginning of this year. Should the deal go ahead, Amaya, that held an existing 5% stake in the business, will initially acquire a majority 52% of Cryptologic with other shares being bought in the coming months.

The recommended cash offer of $2.535 per share represents a premium of around 55% to the closing price of $1.64 on 14 December ““ the last day prior to the date of the announcement of a possible offer.

David Gavagan, chairman and interim CEO of Cryptologic told eGaming Review that he had been very impressed with the Amaya management team, including CEO David Baasov, and that the business, founded in 1995 in Canada, has a bright future under its new ownership. Asked about his and other employees future roles at the business Gavagan said this had not yet been discussed.

In a statement to the Toronto stock exchange this morning, Amaya president and chief executive David Baazov said: “We believe we share many of the same fundamental values and business philosophies as CryptoLogic and we are excited about the opportunity to work in partnership with its management and employees.

“We look forward to completing the acquisition of CryptoLogic as another important step in our international expansion strategy to deliver leading edge gaming solutions to our expanding global client base of regulated gaming operators and governments,” he added.

Amaya now owns Cryptologic’s long-standing casino brand Intercasino as well as one of the industry’s largest gaming libraries with more than 300 titles. In 1996 Intercasino became one of the first real-money online casinos to launch. Cryptologic also runs a business services division offering account and fund management, player and partner support services and business intelligence and marketing.

The Malta licensed business, that also has operations in Dublin and Toronto employing 120 people in total, has been in decline for a number of years. In August 2010 ex-CEO Brian Hadfield resigned following poor second quarter results and continuing losses with Gavagan stepping in to oversee further restructuring and a plan to cut the company’s workforce at the end of last year. At the time the firm posted a net loss of US$12.7m compared with a loss of $3.2m the previous quarter in 2010. Since then the business has effectively been up for sale.

In October 2010 Cryptologic’s losses for the first nine months of that year doubled with the firm posting a loss of $19.5m for the nine months to the end of September ““ up from $10.7m in the same period last year. Its restructuring plan, initiated in August, saw its total expenses cut by more than half. It is thought more than 100 staff lost their jobs at the time, while a new operational management team was put in place to lead its hosted casino business with Huw Spiers becoming group head of operations and chief financial officer and Ian Price becoming group head of business development.

Early last year the company appointed Deloitte to carry out a strategic review and possible sale.