Last weekend, as poker legend Doyle Brunson was hunkered down at the Rio competing in the World Series of Poker, the financial community was buzzing over his $700 million cash offer to purchase WPT Enterprises, the parent of the World Poker Tour.
Once rumors of the unsolicited bid were confirmed, shares of WPT surged almost 50 percent on Friday to close at a high of $26.50, after hitting $29.50 during the day.
But share prices came back to earth on Monday as WPT reported it was not able to confirm the offer.
"This is a very attractive offer," said Traci Mangini, an analyst with Think Equity Partners, a San Francisco investment bank. "How could a 100 percent premium not be a good offer? They have great growth potential with their online business ”¦ WPT has a great brand and high earnings potential.
"My growth projection calls for 75 percent growth in earnings per year," Mangini continued. "When you combine online gaming with all of its other initiatives, I think a 75 percent growth rate is achievable and may even be conservative."
WPT officials said they were evaluating the bid but would need to negotiate further with Brunson’s team.
"There are always people asking questions about whether WPT is for sale but this came as a surprise. It’s the first time we’ve received an offer on paper," chief executive Steven Lipscomb, who co-founded the company in 2002, told Reuters. "But the term sheet was so vague with no terms ... and we’re trying to get information as quickly as we can so we can make an assessment of what the offer is and if it’s credible."
It was learned Monday that the bid has a built in fail safe clause — the offer would expire at 5:30 p.m., Tuesday, although WPT could get a one-week extension.
Lipscomb, who owns about 8 percent of WPT, said the board had given the company approval to look into the deal but did not comment on its merits. The company is seeking further details from Brunson’s lawyers, who include Chaka Henry of the Las Vegas law firm of Goodman & Chesnoff.
The WPT’s largest shareholder with a 62 percent stake, Lakes Entertainment Inc., acknowledged it had received a copy of the offer and that it was currently reviewing it. Lakes shares rose almost 22 percent to $18.09 on Friday.
Doyle "Texas Dolly" Brunson, 71, is one of the best-known poker players in the world. He has won the World Series of Poker championship twice, as well as 10 coveted World Series gold bracelets.
Nicknamed Texas Dolly after his native state, Brunson is acclaimed as perhaps the best poker player of all time, and his book, "Super System," is regarded by some as the bible for poker players.
Brunson was the first of the high stakes hotel poker players in Las Vegas, turning to cards when a basketball career with the Minneapolis Lakers ended after he shattered his leg in an accident at a gypsum factory. He still uses a cane and walks with a limp.
In recent years, Brunson has assumed the mantle of entrepreneur. He is associated with an online poker site, DoylesRoom.com, and would like to create a Doyle Brunson Poker Network.
"I’m always looking for opportunities to expand my businesses and by owning the WPT, it will help in every area," Brunson reportedly told an online news agency. "I have the highest respect for Steve Lipscomb and what he’s created with the WPT. I plan to continue a successful product for poker lovers all over the world."
Founded in 2002, WPT creates television programming based on its World Poker tour, a series of high-stakes tournaments that are aired on the Travel Channel.
Incidentally, Doyle Brunson hit a bad streak of luck last weekend and busted out of the World Series’s championship event in the first round.
Brunson went all-in with K-J versus Matthew Milger’s pocket 7s. The flop, turn and river couldn’t improve Brunson’s hand and he was eliminated.
Which goes to show you that sometimes even a king isn’t a guaranteed winner.