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The Stars Group Sells Off Stake In Jackpotjoy
The Stars Group, the Toronto based corporation that operated as the Amaya Gaming Corporation until a rebranding effort earlier this year, has sold off its entire sake in Jackpotjoy. The transaction brought in $77m in cash to The Stars Group’s coffers.
For its part, Jackpotjoy is one of the largest online bingo operators in the world. Shares of the company shed 4.6% of their value on the news, falling as low as 823p. Following the sale, neither company released a statement commenting on the deal.
New Buying Spree For The Stars Group?
The sell off comes amidst rumors that The Stars Group is getting ready to go on a massive buying spree. CEO Rafi Ashkenazi has hinted in recent weeks that he is looking to raise as much as $2.5b in order to make purchases of online gaming properties.
Although unwilling to offer up any names, Ashkenazi did make clear that there would be multiple companies and transactions involved when the trigger is finally pulled.
The potential moves come on the heels of a decreased reliance by the company on its flagship PokerStars poker room for revenue. Q3 2016 saw non-poker revenues account for 28.9% of total revenues — a year over year increase of 5%.
A Rebooted M&A Strategy
There are obvious reasons for the increased interest and awareness surrounding any potential M&A The Stars Group might choose to undertake.
For starters, as the controlling entity of the most popular brand in online poker the spotlight is on the company’s ongoing efforts to make poker significantly less important to revenues.
But another key factor is The Stars Group’s struggles to truly corner the online casino market. When the company first purchased the PokerStars brand, it was widely expected that there would be little problem capturing market share once an emphasis was placed there. Those hopes have failed to materialize, provoking an interest in acquiring additional online casino properties to fill the void.
Overall, the decision to sell off shares in a strong brand illustrates that management is looking to hoard cash. Therefore, it shouldn’t be long before the other shoe drops and significant purchases are made.