Saturday, October 31, 2009

Mandalay Media Bids $35 Million for World Poker Tour, by Dan Cypra - 30th October 2009

It appears that the fight to purchase World Poker Tour Enterprises (WPTE) is not over. In August, a subsidiary of Party Gaming put in a bid to buy the roving tournament series for $12.3 million. Now, Mandalay Entertainment has upped the ante to $35 million.

The price of poker is going up. On Friday, the industry received news that Mandalay Entertainment, which a Los Angeles business publication described as “a global publisher and distributor of branded entertainment for 3G mobile networks, including images, video, TV programming, and games,” offered $1.69 per share to buy the WPT. The dollar value represented a 54% premium over the WPTE’s closing price on October 26th.

At the time of writing, shares of WPTE, which are traded on the NASDAQ Stock Exchange under the same four-letter symbol, were fetching $1.14. A statement released by Mandalay stated that the previous proposal offered no payout to WPTE investors. Instead, the company would use its $12.3 million in newfound money and invest in a business outside of the poker industry. The Mandalay proposal, worth three times the amount of Party Gaming’s offer, “would provide significant cash and stock directly into the hands of WPT shareholders,” according to the company.

A WPTE shareholders’ meeting took place at 10:00am PT at the Renaissance Hollywood Hotel today. On the docket was a vote on the Party Gaming bid. A WPTE spokesperson commented that they could not discuss the proceedings due to SEC rules. Mandalay Entertainment is unrelated to the casino in Las Vegas of the same name, which is owned by MGM Mirage.

As part of the Mandalay proposal, WPTE shareholders would receive $35 million in a mixture of stock and cash consisting of $10 million in Mandalay stock plus the balance in cash. The offer explains, “Based on October 26, 2009 closing prices, our offer represents a 23% premium over the value at closing of your proposed asset sale with Peerless and a 54% premium over WPTE`s closing price.”

Mandalay Entertainment boasts annual revenues of $40 million and the company noted that it could conduct its due diligence of WPTE within 10 days. Its letter to WPTE Board members explained several reasons that it would make for an attractive trading partner, including “seasoned” industry veterans in management roles, social networking experience, and access to a vast mobile phone network that includes users of Verizon, AT&T, Sprint, and Virgin Mobile. It added, “Mandalay Media can leverage its mobile platform and operator relationships throughout the world to provide a full mobile social media and sports/poker playing experience.”

Under the terms of its sale with Peerless Limited, a subsidiary of Party Gaming, WPTE agreed to turn over its television library, brand names, and trade names. In return, the company would receive a cash payment of $12.3 million “less the amount of certain obligations of an affiliate of PartyGaming.” In addition, WPTE officials would also receive 5% of future gross gaming revenues and 5% of other funds raised from the sale.

Also in the terms of the WPTE’s sale to Party Gaming is a $1 million termination fee. The WPTE is already on the hook for $1 million owed to Gamynia Limited, which completed purchase of the company’s assets back in August. Gamynia is a subsidiary of Playtech, which owns and operates the iPoker Network, and bid just over $9 million for WPTE.

Mandalay’s stock is traded on the OTC Bulletin Board under the symbol MNDL. At the time of writing, its asking price was $0.49 per share, up $0.04 on the day. Shares of WPTE, meanwhile, rocketed on the news, climbing from $1.11 at the close of business on Thursday to $1.42 to open the day on Friday, a rise of 28%, before falling back to $1.14.

We’ll have more on this breaking story right here on Poker News Daily. (Credit: Poker News Daily)

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