Bally’s Corp. made an “unsolicited” $100 million offer to buy Allied Esports Entertainment, Inc., the esports company announced Friday.
Providence, Rhode Island-based Bally’s made its “friendly” proposal earlier this week to buy Allied Esports, which owns and operates World Poker Tour and HyperX Esports Arena Las Vegas at Luxor, according to public financial filings with the Securities and Exchange Commission.
A Wednesday offer letter from Bally’s, included in the filings, tells Allied Esports, “We are prepared to devote our entire resources to finalizing the transaction … over the next several days with a view to completing due diligence and publicly announcing a definitive agreement within ten business days of the Board’s acceptance of our proposal.”
The proposal comes about six weeks after Irvine, California-based Allied Esports announced an agreement to sell the World Poker Tour business to growth equity firm Element Partners, LLC. for about $78 million. The Bally’s offer would require Allied Esports to nix its deal with Element, currently expected to close by the end of the month, an Allied Esports release said Friday.
Allied Esports “will evaluate Bally’s proposal in due course” and continue discussing with Element “potential updates” to their agreement, the release said.
Bally’s is unaffiliated with the Strip casino with the same name, though it did buy the Bally’s brand from the casino’s owner, Caesars, in November. The regional gaming company, previously known as Twin River Worldwide Holdings, owns and operates gaming and racing facilities across the United States. A Bally’s representative declined to comment.
The Wednesday letter indicates the company was sweetening a March 1 proposal to buy Allied Esports. The Wednesday “last offer” includes:
■ A proposed “increase” to $100 million, paid in Allied Esports or Bally’s stock, cash or a mix of both.
■ A $3 million “break-up fee” to Element for losing its Allied Esports deal.
■ A $10 million “reverse break-up fee” to Allied Esports in the “highly unlikely event” Bally’s is responsible for a deal falling through.
■ An agreement “substantially the same” as Allied Esports’ stock purchase agreement with Element, “revised only to the extent necessary to accommodate the specific aspects of our proposal.”
An Allied Esports spokesman confirmed Friday that Bally’s “initiated the conversation and their interest with an offer” for the whole company. He also confirmed the company was continuing to explore a potential sale of its esports businessand declined to share possible future plans for the esports arena.
In the meantime, the company’s board recommends proceeding with the World Poker Tour sale to Element.
Allied Esports announced the World Poker Tour agreement on Jan. 19. In the same announcement, the esports company said it had also begun exploring a potential sale of its esports business.
Growth in esports and gaming during the pandemic has “driven strategic interest” for Allied Esports’ namesake business component, read a company statement in January.
“Despite the many challenges caused by the COVID-19 pandemic, the (World Poker Tour) business has delivered substantial, impactful results, specifically through its online platforms and services, and has made meaningful contributions for the Company,” Allied Esports CEO Frank Ng said in the statement. “In addition, Allied Esports, with its world-renowned HyperX Esports Arena Las Vegas and best-in-class production services, has generated market attention as the esports industry gained momentum during the pandemic.”
“Due to COVID-19’s impact on the Company’s overall revenue generation and profitability timeline, we believe the forthcoming sale of the WPT business will garner significant capital and an avenue to determine new opportunities that will deliver accelerated returns for our stakeholders,” he said.
The January release said Minneapolis-based Lake Street Capital Markets was helping the company explore a sale. The SEC filing noted New York City-based Regan & Associates, LLC was the solicitor for Bally’s.
The company said that at the completion of the poker sale (and assuming a possible esports sale), Allied Esports would transition with a new name as a holding company that would pursue real money gaming and other online entertainment.
The Nevada Gaming Control Board this week recommended a series of licenses that would register Bally’s Corp. as a publicly traded company in the state, operate the Montbleu resort in Stateline at Lake Tahoe and issue favorable suitability findings for several of its executives. Final approval is scheduled for March 18.
Chris LaPorte, founder of Las Vegas-based esports consulting group Reset, expressed surprise at the proposed offer. He said he was hoping for additional clarity on the situation before offering more insight.
“The revenue generating asset is clearly the World Poker Tour, but any interest from the traditional gaming space to further support the development of the esports industry is a step in the right direction,” LaPorte said.