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Element And Allied Esports Execute Revised Purchase Agreement For World Poker Tour Brand

James Murphy
by in Gaming Industry on
  • Bally’s Corporation and Element Partners LLC have submitted competing bids to acquire the World Poker Tour brand from Allied Esports.
  • Allied’s board initially determined that Bally’s bid was the superior proposal.
  • Element countered with a revised agreement that was better than what Bally was offering.

At the end of last week we opined that ‘Bally’s Corporation Appears To Have Upper Hand In Bid For World Poker Tour Brand’. In fact, that was the title of our article on the ongoing bidding war for the rights to the World Poker Tour brand. Now it looks as if Bally’s (NYSE: BALY) may be out in the cold. Earlier today, Allied Esports announced that a revised purchase agreement had been executed with Element Partners LLC. Long story short, Element sweetened the deal enough to better what Bally’s was offering.

Here’s the situation–Bally’s is trying to add the World Poker Tour brand to their portfolio which has put them in a competitive bidding situation involving esports entertainment company Allied Esports Entertainment (NASDAQ: AESE) and private equity fund Element Partners LLC. In January, Element had agreed to pay Allied $78.3 million for the WPT brand. That deal was expected to close at the end of March 2021. Bally’s got involved on March 8, when Allied announced that it had received an unsolicited acquisition offer for a total of $100 which would include the company’s esports business *and* the WPT brand. Obviously, that would require the cancellation of the Element sale.

Initially, Allied’s board recommended that shareholders accept the Element Partners offer. That was until Bally’s Bally’s revised their offer to aquire only the World Poker Tour brand for $90 million USD in cash. After this revision, Allied did a 180 and recommended that shareholders approve the deal with Bally’s:

The Company notified Element that it intends to terminate their stock purchase agreement unless, prior to 5:00 p.m. Pacific Time on March 19, 2021, the Company and Element negotiate an amendment to their pending stock purchase agreement such that the Bally’s revised proposal no longer constitutes a Superior Proposal.

…and that’s exactly what Element did. Here’s the key points of the revised offer:

  • increases the overall purchase price from $68.25 million at closing and $10 million guaranteed revenue share payments paid over three years after closing, to $90.5 million, all payable at closing;
  • increases the initial deposit of the purchase price from $4.0 million to $10.0 million;
  • increases the termination fee payable to Element if AESE accepts a competing acquisition proposal, or consummates an acquisition proposal within 12 months after termination of the revised stock purchase agreement, from $3.0 million to $3.45 million;
  • extends the date on which AESE and its subsidiary, Allied Esports Media, Inc., or Element may terminate the revised stock purchase agreement if any conditions to the closing have not been satisfied (and such terminating party is not in material breach of the revised stock purchase agreement) from March 31, 2021 to September 30, 2021 (the “Outside Date”); and
  • increases Element’s non-performance fee from $3.0 million to $10.0 million, and eliminates the ability of Element to terminate the revised stock purchase agreement prior to the Outside Date by paying the non-performance fee.

The deal is now expected to close in late April assuming that shareholders approve it. No response has been forthcoming from Bally’s though they did issue a press release today announcing the completion of their deal to acquire DFS platform Monkey Knife Fight.

At the time of publication, James Murphy has a long position in BALY.

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