Amaya Gaming has announced a deal to purchase Pokerstars for almost $5 billion in cash. The deal will be financed by a variety of lenders including Deutsche Bank, Barclays, Macquarie and Blackstone. This transaction will completely transform Amaya and vault it to the forefront of the online gaming revolution. It will also make it easier for Pokerstars to re-enter the US market.
This is certainly exciting news for Amaya shareholders, but how will this deal impact the financial ratios of Amaya? It will add a significant amount of debt to Amaya since Pokerstars former owners will receive their payment in cash. Amaya will take on $2.9 billion of new debt and issue $1.6 billion of new equity and preferred/convertible securities to the lenders. But with about $475 million of earnings before interest and taxes, Amaya will have the capacity to service this debt. The additional financial leverage is also matched with the strong growth prospects for online gaming where Amaya will now be at the forefront.