Amaya Interested in Buying Cryptologic

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The leading online casino software provider Cryptologic has made an announcement that Amaya Gaming Group has made a provisional offer for purchase of its share capital. This announcement has been prepared in accordance with English law and the Takeover Code. It merely shows intent and does not indicate a done deal. This announcement has been expected by the online gambling industry since April 2011, when Amaya purchased a sizeable chunk of Cryptologic shares.

The announcement goes on to state that the Board of Cryptologic has agreed in principle to "the outline terms of a possible recommended all cash offer from Amaya for the acquisition of the entire issued and to be issued share capital of Cryptologic." The provisional offer is at US$2.50 in cash per common share. This is at a premium of 52% over the closing share price of US$1.64 per common share on NASDAQ on December 14, 2011. On the basis of this provisional offer, which is referred to as "Possible Offer" in the announcement, the Board of Cryptologic will permit Amaya to conduct confirmatory due diligence.

Stripped of legalese, the provisional offer is subject to the satisfaction of three pre-conditions. The first condition is that Amaya is able to complete the due diligence to its satisfaction and is okay with the results of that due diligence. The second condition is the unanimous recommendation by the Board of Cryptologic. And the third condition is the confirmation by Amaya that it has sufficient funds to complete the offer. The announcement also outlines the future course of action under the Takeover Code. By January 12, 2012, Amaya is required to either announce a firm intention to make an offer for the Company or announce that it does not intend to make an offer.

Amaya has reserved its right to vary the form and/or mix of the consideration with the recommendation and consent of the Board of Cryptologic. This means that after the due diligence Amaya may make an offer at a price lower than US$2.50 per common share. The announcement by Cryptologic clarifies that even if all the conditions are met it is not binding on Amaya to make a firm offer. Cryptologic further clarifies that Deloitte Corporate Finance is acting for Cryptologic alone and for no other party in connection with the offer.

In April 2011 Amaya had reported that it had acquired ownership of 5.05% of the shares of Cryptologic. It had purchased 652,170 shares for just over a million dollars. Then, David Baazov, the chief executive and president of Amaya, had said that the Cryptologic stock was acquired in order to facilitate a possible strategic transaction with the software provider.

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