World Poker Tour Enterprises (WPTE) got a $35 million offer from Mandalay Media for the company. PartyPoker had previously offered $12.3 million for WPTE's operating assets, topping an even earlier offer. Mandalay has asked WPTE to postpone the shareholder meeting, scheduled for today, at which they were to approve the sale to PartyPoker.
Mandalay Media is a small, unprofitable company that distributes entertainment, including video and games, over cell-phone networks. Hollywood legend Peter Guber is co-chairman and 13% owner.
The price difference isn't as much as it seems: Party offered to buy the operating assets of the World Poker Tour from the company for $12.3 million. Mandalay is offering to buy the whole company from the shareholders for $35 million ($25 million in cash and $10 million in Mandalay stock). By getting the whole company Mandalay would also get the approximately $14 million in net current assets (cash and such) that WPTE holds. They say that their offer is 23% better than Party's and 54% above WPTE's current share price.
Mandalay claims that they'll add value by putting the World Poker Tour on cell phone networks, but I'm skeptical. Online poker room sponsorship of poker tours and TV shows is proving to be the winning model in the field, so I think Party would get more value out of WPTE than Mandalay.
Update: Mandalay has already increased their offer, to $36.5 million with a greater proportion of cash.
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Friday, October 30, 2009
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Updated: Mandalay has already increased their offer to $36.5 million, with a greater cash portion.
WPTE shares ended unchanged today, indicating investors don't believe the new offer will go through.
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