Mandalay Media Announces Offer for WPTE

Published on 2009-10-30 12:22:00

Just when it seemed certain that Peerless Media Limited (a subsidiary of PartyGaming) was going to walk away with the World Poker Tour, another company pops up at the last moment and throws a wrench into the works.

Let's recap:

It wasn't that long ago that WPTE (WPT Enterprises Inc., the parent company of the World Poker Tour) seemed destined to die a slow and painful death.

The company was losing money every quarter, and it seemed to be just a matter of time before they finally waved the white flag. GSN decided not to renew their deal with the company, and shares of WPTE traded for as low as 15 cents per share.

A few months ago, a company named Gamynia Ltd. announced that they would be purchasing the World Poker Tour assets from WPTE for $9 million dollars. WPTE would retain their cash and cash-equivalents, investments and "certain excluded assets". WPTE and Gamynia Ltd. also entered into a revenue sharing agreement.

A short while later, a "mystery bidder" appeared with a significantly improved deal.

This "mystery bidder" ended up being Peerless Media Limited, which is a subsidiary of PartyGaming.

The deal called for Peerless Media Limited to purchase a number of WPT assets, including brand names and their library of episodes, for $12.3 million dollars.

Like the original Gamynia Ltd. deal, WPTE would retain their cash, etc. Also, WPTE would be entitled to a percentage of revenues going forward, of an amount to total "at least" three million dollars.

In both scenarios, WPTE would not distribute the cash from the deal to shareholders, or disperse any of their cash or cash-equivalents. Instead, they were planning on using the capital to focus on "non-poker" ventures.

According to Yahoo! Finance, WPTE currently has $16 million in cash, and $2.65 million dollars in debt.

This deal seemed destined for approval, as Gamynia Ltd. didn't seem to be interested in outbidding Peerless.

Last night, a third bidder materialized for the World Poker Tour.

Mandalay Media announced that they were willing to purchase WPTE for $36.5 million dollars, or $1.77 per share.

This deal consists of $28.5 million in cash, $5 million dollars worth of Mandalay Media stock and an additional $3 million dollars worth of "guaranteed perpetual revenue participation rights."

Mandalay Media stated that this was a "superior proposal" to the Peerless Media offer.

Now, $36.5 million dollars vs $12.3 million seems like a huge difference, but the deals are structured differently.

In the Peerless deal, WPTE would be paid cash and future revenues for their World Poker Tour assets. WPTE, which would essentially be a skeleton company at this point, would keep the cash from the sale, as well as their previously held cash, cash equivalents, investments and "excluded assets".

The Mandalay Media deal, as far as I understand, would combine Mandalay and WPTE.

Mandalay would pay a chunk of cash to WPTE shareholders to close the deal, but they would also be absorbing the cash and cash equivalents that WPTE is currently holding.

Mandalay's deal is clearly structured to win over approval from WPTE shareholders.

Instead of holding shares in a company that is basically just holding cash, WPTE shareholders would receive a mostly cash payout from Mandalay Media.

According to Mandalay Media, their offer represents a premium of "approximately 28% over the implied value at closing of WPT's pending asset sale with Peerless Media Ltd."

According to their press release re: the deal, Mandalay Media is a "global publisher and distributor of branded entertainment for 3G mobile networks."

Here is the press release from Mandalay Media

It will be interesting to see how the management of WPTE responds to this deal, as it would nix their plans to steer WPTE into a "non-poker" venture.

I'll also be interested to hear if Peerless Media raises their bid..

Who would have ever thought that the World Poker Tour would be the subject of a bidding war?

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Filed Under: Random Poker News