Canada’s Amaya Gaming Group will become the world’s largest publicly-traded online gaming company after entering into a definitive agreement to acquire the PokerStars and Full Tilt Poker brands for an aggregate purchase price of US$4.9bn in a deal which will see the brands return to the US market.

In a deal confirmed late last night, Amaya agreed a deal to acquire 100 per cent of the issued and outstanding shares of Oldford Group Limited, the parent company of Rational Group and operator of the two leading online poker brands who have more than 85m registered online and mobile players between them.

“This is a transformative acquisition for Amaya, strengthening our core B2B operations with a consumer online powerhouse that creates a scalable global platform for growth,” said David Baazov, CEO of Amaya. “Mark Scheinberg pioneered the online poker industry, building a remarkable business and earning the trust of millions of poker players by delivering the industry’s best game experiences, customer service and online security.

“Working with the experienced executive team at Rational Group, Amaya will continue that tradition of excellence and accelerate growth into new markets and verticals.”

The acquisition will be financed through a combination of cash on hand, new debt, a private placement of subscription receipts, a private placement of common shares and a private placement of non-voting convertible preferred shares.

The companies said that the transaction combines complementary businesses with minimal overlap - Isle of Man-headquartered Rational Group’s B2C poker business including PokerStars, Full Tilt Poker, live poker tours and events, and online and TV poker programming; and Montreal-headquartered Amaya’s B2B interactive and physical casino and lottery gaming solutions.

Last year, Oldford Group generated revenue of $1.1bn, an increase of 13 per cent versus the previous year, with adjusted EBITDA of $420m. Amaya said that the acquisition is expected to be immediately accretive to earnings and provide strong cash flow from operations. This year, adjusted EBITDA is expected to be between $600m and $640m for the combined entity.

Rational Group founder and CEO Mark Scheinberg said: “I am incredibly proud of the business Isai (Scheinberg) and I have built over the last 14 years, creating the world’s biggest poker company and a leader in the iGaming space.

“Our achievements and this transaction are an affirmation of the hard work, expertise and dedication of our staff, which I am confident will continue to drive the company’s success. The values and integrity which have shaped this company are deeply ingrained in its DNA. David Baazov has a strong vision for the future of the Rational Group which will lead the company to new heights.”

Under the terms of the transaction, which has been unanimously approved by the boards of directors of both companies, Oldford Group shareholders led by PokerStars founder and CEO Mark Scheinberg, will dispose of their shares to a wholly-owned subsidiary of Amaya. Scheinberg and other principals of OIdford Group will resign from all positions from the company on completion of the deal.

Rational Group’s executive management team will be retained and online poker services provided by PokerStars and Full Tilt Poker will be unaffected by the transaction.

The purchase price will be paid using a combination of cash on hand, new credit facilities and equity financing.

This includes $2.1bn senior secured credit facilities, consisting of a $2.0bn first lien term loan and a $100m revolving credit facility fully underwritten by Deutsche Bank AG New York Branch, Barclays Bank, and Macquarie Capital.

A further $800m will be raised via a senior secured second lien term loan fully underwritten by Deutsche Bank, Barclays, and Macquarie Capital, with participation from GSO Capital Partners LP (GSO), the credit division of The Blackstone Group and an investment manager, on behalf of its clients.

In addition, $1bn is to be raised through the issuance of convertible preferred shares on a private-placement basis at an initial conversion price of CAD$24 per convertible preferred share.

Another CAD$500m is to be raised through the issuance of subscription receipts convertible on a one-to-one basis into common shares upon completion of the transaction on a bought-deal private-placement basis, and an Underwriters' Option to purchase subscription receipts for additional gross proceeds of up to $140m and a commitment from GSO to purchase common shares for additional gross proceeds of up to $55m.

The remainder of the balance will be payable in cash.

Amaya believes the deal will expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the US market.

Additionally, Amaya will provide an extensive selection of its online casino games to expand the nascent Full Tilt Poker casino platform. Amaya said that it intends to strongly support Rational Group’s growth initiatives in new gaming verticals, including casino, sportsbook and social gaming, and new geographies.

Amaya will pay $4.9bn to the holders of Oldford Group securities, which will be satisfied by a $50m deposit and a cash payment of $4.45bn at closing of the deal. A deferred payment of $400m will also be subject to adjustment, payable upon the earlier of July 31st 2017 or 30 months following closing of the acquisition.

If the agreement is terminated prior to closing of the transaction, under certain circumstances Oldford Group will be entitled to retain the $50m deposit, which may be increased by increments of $10m under certain circumstances.

Completion of the deal will be subject to the approval by Amaya’s shareholders and to customary closing conditions, including receipt of all regulatory approvals and that of the Toronto Stock Exchange regarding the transaction and the listing of the common shares issuable in connection with the deal.

Shares in Amaya Gaming Group (Co. Data) (TSX:AYA) were suspended from trading yesterday pending an announcement, having gained 17.14 per cent in trading to CAD$14.08 per share in Toronto Thursday. The share hit a new 52-week high when it reached $14.17. In the past year, the shares are up 139 per cent.