The World Poker Tour and its related assets are back on the market after Allied Esports broke off its deal to sell the WPT to Element Partners. The break came after Bally’s Corporation made a $100 million offer, eclipsing Element’s own $78 million bid.
The deal with Element had seemed to be all tied up. Adam Pliska, the CEO of the WPT, made an excited announcement on Twitter. The poker world started gearing up to watch the shift in direction as Element, a venture capital firm, took over and put their stamp on their newest acquisition. But it was not to be.
But just a few weeks later, the news broke that Bally’s Corporation had made a $100 million unsolicited offer. And Allied Esports reopened the floor to negotiations.
Element or Bally’s
The initial offer from Bally’s was not directly comparable to Element’s. Element Partners was only looking to buy Allied’s subsidiary Club Services, Inc. This subsidiary is the company that owns the WPT brand directly.
Bally’s initial offer on the other hand was for all the outstanding equity in Allied Esports, the parent company. This would include Club Services indirectly as one of Allied Esport’s assets. The $100 million was available in cash, Bally’s stock, or a mix of both. They also offered to cover the $3 million termination fee which Allied would owe Element for breaking their contract off.
Since the news of the Bally’s offer broke, the deal appears to have changed somewhat. This is not surprising as negotiations have been underway behind closed doors for a while now.
The new deal is $90 million for Club Services Inc. It appears Bally’s has pulled back from purchasing Allied Esports outright. They just want to get their mitts on the WPT.
In a press release, Bally’s announced that they are purchasing “all of the equity interests of Club Services, Inc, an indirect wholly-owned subsidiary of [Allied Esports] that directly or indirectly owns the [Allied Esports]’s poker-related business and assets, including the entities comprising the World Poker Tour.”
Bally’s will also pay a $3 million termination fee to Element Partners. And should Bally’s fail to close the deal, they will owe a further $10 million penalty fee to Element on top of this.
Wheeling and dealing
The tour was worth $50 million in 2019 when Allied Esports purchased it. So, $90 million represents quite a return on their investment. And it was realized in less than two years.
The shift in focus of Bally’s offer may have been to allow the deals to be more directly compared. This would ensure that Allied Esports could invoke the “Superior Proposal” wording in their Stock Purchase Agreement with Element Partners.
The deal could serve the WPT brand pretty well. Bally’s Corp has been on a growth spurt the last six months. Buying up companies in almost every field of the gambling world.
As such this will situate the WPT within a huge gambling and media empire. With any luck, that will allow the WPT to expand even further, though the counter-risk is that the Tour will become submerged in the multinational corporate mire.
Whichever way the cookie crumbles, we’ll all be watching closely. Possibly by live stream or on our TVs.
Featured image source: Flickr by Rian Castillo