Stock dived 18 percent Friday… and Intertain suffered as well
Shares in the Montreal-based online gambling group Amaya Gaming Inc. plummeted 18 percent Friday after the company confirmed that Quebec's securities regulator has launched an investigation into trading activity surrounding the $4.9 billion acquisition of PokerStars parent The Rational Group.
Amaya's offices were visited by members of the Royal Canadian Mounted Police and officials from the Autorite des Marches Financiers, the Quebec securities regulator earlier this week (see previous InfoPowa report).
Amaya shares dropped nearly 29 percent to $25 in early morning trading on the Toronto Stock Exchange, but recovered somewhat to close down $6.2 or 18.31 percent lower at $28.64.
The share price movement was a dramatic reversal for the company's stock, which had more than quadrupled in value to an all-time high of $39.25 when the Rational Group deal was concluded mid-year.
There was widespread speculative comment on an impending major acquisition for Amaya immediately prior to the announcement of the Rational-Oldford Group deal, which sent the company's share price on a sharp upward spiral.
Amaya commented on the visits late Thursday, saying that as far as it was aware the investigation does not involve any allegations of wrongdoing by the corporation, and that the enquiry won't have any impact on its business operations, employees or companies.
The authorities also paid visits to investment banker Canaccord Genuity and Manulife Financial.
Canaccord Genuity, which along with Deutsche Bank Securities, was lead financial adviser on the acquisition of the Oldford Group, parent company of the Rational Group, the previous owner of Pokerstars. A spokesman said that the company is cooperating fully with a "routine" request for information by the Autorite des Marches Financiers.
In a short statement the RCMP said it had merely provided security for the Autorite des Marches Financiers visits, and rejected media reports that the unannounced visits had been a police raid.
Insurance company Manulife Financial says it is cooperating fully in the Autorite's investigation.
A spokesman for the Autorite said that the regulator does not comment on cases it is currently investigating.
Meanwhile the ripples from the publicity appeared to extend to another Canadian online gambling firm, with the Intertain Group's stock falling 26 percent Friday to $10.70.
The company quickly pointed out that there did not appear to be any factors connecting it with the regulator's activity on Amaya, and that it had not been approached by security, enforcement or regulatory bodies.
The Associated Press news agency reported that earlier this year Amaya "…acquired an ownership stake in Intertain and five percent of its unsecured debt."
Industry analysts predicted that, unless the company or its management were the targets of the investigation, it should not adversely impact the continued progress of Amaya.
Online Casino News Courtesy of Infopowa