Intertain Surges After Saying Received Acquisition Interest

  • Stock of online gambling company rises as much as 23 percent
  • Reported fourth-quarter profit that beat analyst estimates

Intertain Group Ltd., a Canadian online gaming company, jumped the most on record after saying it was considering a sale and had received “many” expressions of interest.

The Toronto-based firm rose as much as 23 percent intraday, the most since listing through a reverse takeover in February 2014, and was up C$1.80 to C$11.49 at 2:58 p.m. in Toronto, according to data compiled by Bloomberg. The shares are down 27 percent in the past 12 months.

“The Company has received many expressions of interest in acquiring all or material parts of its business,” Intertain said in a statement along with its fourth-quarter earnings report. It would consider “a sale of the company, one or more business units or partial offers and recapitalizations.”

With the rise of the Internet, the online gambling business has surged. Pointe-Claire, Quebec-based Amaya Inc., which is the second-biggest shareholder in Intertain with a 2.7 percent stake, said last month its chief executive officer indicated it wanted to take over the company. The industry is beset in some jurisdictions by regulatory uncertainty as lawmakers decide how to tax and regulate online gambling.

Ongoing M&A

“Even though there is no guarantee that a transaction will be completed, the backdrop of a strong European gaming sector, ongoing M&A across the industry with an appetite for more, and a strong fundamental story being told through the results should provide investors with sufficient credence that value will be surfaced," Eyal Ofir, a Toronto-based analyst at Dundee Securities Corp. said in a note. He has a buy on the stock and a C$21 price target.

Intertain reported fourth-quarter profit of 59 Canadian cents a share, compared with the average analyst estimate of 52 Canadian cents. The company forecast full-year revenue for fiscal 2016 of C$460 million ($346 million) to C$500 million, in line with the average estimate of C$480.8 million.

The company said it had hired Canaccord Genuity Group Inc. to lead discussions with potential acquirers.

*An earlier version of this story corrected the price target in the fifth paragraph.

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