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Allied Esports Completes Sale of WPT to Element Partners

Written by Jennifer Newell
Last updated on
Jennifer Newell

The wild ride that has been the sale of the WPT is over. Allied Esports Entertainment completed its sale of the WPT, obviously including the World Poker Tour, to a private investment firm named Element Partners.

Just after the very rough year that was 2020 – that whole pandemic thing, as if it needed to be said – the World Poker Tour started the new year with a mixed bag. On one hand, poker players were lining up at live tournaments and creating record-setting prize pools. On the other hand, Allied Esports wanted to offload the WPT and all poker-related assets. That wasn’t going to be as easy as it initially sounded.

A Bidding War for WPT

The initial bid by Element Partners, that privately-held investment firm, seemed like a lock, but the people involved did not realize that Bally’s Corporation would want in on the action.

–January 19, 2021: Element Partners offered $78.25M, starting with a cash payment of $68.25M and then a 5% revenue share of WPT tournament entry fees for 3 years, maxing out at $10M.

–March 5, 2021: Bally’s Corporation offered $100M for the WPT and Allied Esports, both companies for a cash, stock, or combination payment.

–March 16, 2021: Bally’s Corporation revised its proposal to offer $90M in cash for just the WPT and its poker-related businesses and assets.

–March 22: Element Partners increased its bid to $90.5M for the WPT and poker-related assets, payable at closing after a $10M initial deposit.

–March 25: Bally’s Corporation submitted a higher proposal of $105M in cash at closing for all equity interests of Club Services Inc. (CSI).

–March 30: Element Partners increased its bid to $105M for the WPT and associated poker assets via a stock purchase and meeting Bally’s offer.

The Allied Esports board of directors decided that Element submitted the superior proposal. They consulted with financial and legal advisors, and they then approved that bid. From there, it went to Allied Esports Entertainment stockholders for a final approval.

They hoped to close the deal with Element Partners in April 2021.

More Difficult Proposition Than Anticipated

April and May came and went. There was no further word on the deal until June 11, when Allied Esports Entertainment announced a special stockholder meeting set for June 28. They would then “consider and approve the company’s sale of 100% of the outstanding capital stock of Club Services Inc. (poker assets).

The announcement mentioned that Ourgame International Holdings was the largest stockholder with 30.6% of common stock. That meant Ourgame had to obtain approval from its stockholders in a meeting scheduled for June 30.

The June 28 meeting of Allied Esports stockholders did not go as planned. Allied announced that the lack of a quorum for a vote meant that the matter remained outstanding. They rescheduled for July 1 via webcast so more stockholders could participate.

As it turned out, the Ourgame approval was the problem. Haley Hintze investigated the matter and detailed the trouble that brewed during the aforementioned bidding war, complicated by disputes among Ourgame board members regarding the distribution of sale proceeds. Three members tried to retake control of the board in what Hintze described as a corporate coup attempt, though it did fail. Much of the chaos took place in May when an internal Ourgame investigation showed the three ousted members had accumulated significant debts via lawsuits and fines by Chinese authorities. Their opposition to the WPT sale was only to cause problems for Ourgame.

Ultimately, the June 30 meeting produced a positive result for the sale. Ourgame shareholders approved the deal with 54.4% for it and 45.6% against it.

Finalizing the Deal

On July 12, Allied Esports announced the completion of the sale of WPT and all poker-related assets to Element Partners. The company confirmed the $105M price tag, along with 100% of outstanding capital stock of all legal entities pertaining to Allied Esports’ poker-related assets.

This leaves Allied focused solely on the esports industry.

Allied CEO Frank Ng called it a “momentous day for AESE” so the company can focus on growing its esports business. “Congratulations to Adam Pliska and his entire team at World Poker Tour,” Ng said, “as they too move into a new, successful chapter.”

One day later, the WPT announced the sale and noted that the WPT will now operate as a private enterprise. Pliska stated, “WPT management looks forward to this new chapter for the WPT and to the announcement of new initiatives in the near future as we prepare for our 20th anniversary next year and the further expansion of the WPT.”

The WPT’s press release focused primarily on the “record-breaking demand for WPT events.” The company hailed turnout for its events this year and the successful kickoff to Season XIX.

Interestingly, one more day later, Allied Esports announced that Frank Ng resigned as its CEO on July 13. The company replaced him with Libing (Claire) Wu, who is now the CEO, President, and General Counsel.

 

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