World Poker Tour Stockholders Approve Party Gaming Sale

Despite a $36.5 million last-minute bid by mobile entertainment company Mandalay Media, shareholders of World Poker Tour Enterprises (WPTE) approved a $12.3 million purchase by Party Gaming subsidiary Peerless Media on Friday.

Late last week, owners of Mandalay Media submitted a $36.5 million bid to purchase WPTE, a publicly traded company on the NASDAQ Stock Exchange. Mandalay fired a Hail Mary, submitting an offer to purchase the massive television library, trademarks, and other portions of the roving tournament series. On Friday, a special shareholders meeting was held in Los Angeles and, at its conclusion, the sale to Peerless Media, a subsidiary of Party Gaming, was approved. The news appears to end any discussion of Mandalay Media purchasing the WPT.

A press release distributed by WPTE officials on Monday explained the company’s reaction to the last-ditch effort by Mandalay Media to purchase the majority of its assets: “The board of directors of WPTE reviewed the Mandalay Proposal and concluded that it was not a Superior Proposal (as defined in the Agreement). On October 30, 2009, WPTE received a modified written offer from Mandalay Media (the ‘Modified Mandalay Proposal’). On October 31, 2009 the board of directors of WPTE reviewed the Modified Mandalay Proposal and concluded that it was not a Superior Proposal.” Mandalay Media is based in Los Angeles and believed it offered a competitive proposal due to its seasoned management team, global reach, mobile expertise, social media prowess, and success in the gaming marketplace.

The proposal from Mandalay Media implored WPTE management to postpone the special stockholders meeting scheduled for Friday, where on the docket was voting on Party Gaming’s proposal. In total, 67.93% of the company’s common shares were represented at the meeting and the sale was approved by an 85% to 15% margin. Its closing should be completed by the end of the month. Mandalay Media is unrelated to the casino in Las Vegas of the same name.

WPTE’s stock, which is traded on the NASDAQ under the same four-letter acronym, has been on a roller coaster ride over the past four days. On Thursday, WPTE closed at $1.11. When trading opened the next morning, the company’s shares were fetching $1.41, an overnight jump of 28%, on the news that Mandalay Media had submitted a purchase agreement. By the close of trading on Friday, WPTE stock had fallen to $1.10. At the time of writing, which is around Noon on Wall Street, WPTE is treading at $1.07 per share, a drop of $0.04 on the day.

Mandalay Media’s proposal consisted of approximately $36.5 million in stock and cash offerings. WPTE would have received $28.5 million in cash plus $5 million in Mandalay’s common stock and 5% of future revenues. The company had guaranteed that the latter sum would amount to at least $1 million per year over the next three years. The purchase agreement noted that the proposal equated to $1.77 per share, a premium of 61% over WPTE’s closing price on October 26th.

Under the terms of the sale to Party Gaming, WPTE will receive $12.3 million less affiliate payments it owes to the online gaming giant. WPTE will also receive 5% of future gross gaming revenue and 5% “of other future gross revenues less certain taxes and costs earned with the purchased assets in perpetuity.” Party Gaming has guaranteed that the future gaming revenue would total at least $3 million over a three-year period. Peerless Media is based in Gibraltar and its parent company is ElectaWorks Limited.

Once completed, WPTE officials plan to pursue non-poker-related business ventures. The sale’s effect on the WPT tournament circuit is currently unknown. WPT personnel are in the midst of filming the series’ eighth season and will kickoff the Foxwoods World Poker Finals on Thursday. The $10,000 buy-in tournament crowns a champion on November 10th.

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Poker lexicon:

FIFTH STREET - In stud poker, the fifth card to be dealt to each player. Sometimes used to refer to the last card dealt in Hold'em, although the more common term for this is RIVER (q.v.).
POSITION - One's location in the betting sequence, relative to the players still in the hand. First position is first to act.
ALL-IN - To have all of one's chips in the pot. A player who is all-in cannot be forced out of the pot by more betting, but is only eligible to win that portion of the pot he has contributed to. Generally, a SIDE POT is created each time a player is all-in.
BELLY BUSTER - An inside straight draw. Same as GUTSHOT.
RAINBOW - In flop games, a flop in which no two cards are of the same suit. "The flop was A 9 7 rainbow."
TAP - In no-limit games, to wager all of one's money in one bet.

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