WPT Enterprises Bluffed Out

Q: When is a takeover bid not a takeover bid?

A: When there's no real money behind it.

That's apparently the scenario that sent shares of World Poker Tour Enterprises (Nasdaq: WPTE  ) soaring July 8, only to have them subsequently fall off the following week.

The whole thing seems like double dealing to me. On July 7, WPT Enterprises received an unsolicited bid for the company from the Las Vegas-based law firm of Goodman and Chesnoff, supposedly representing an unnamed group of investors led by legendary poker player Doyle Brunson. The company released this information on July 8, and the stock roared up from about $18 to more than $28. But right away, it was apparent that something was amiss. The $700 million offer should have valued the company at closer to $34 a share. So why the big gap?

The WPTE board called Goodman and Chesnoff to verify the offer and to get some additional information. What the board got was worse than silence. Not only did the law firm not offer any additional information, but it also backed away from the whole deal on July 8, without providing any explanation.

WPTE released further information on July 11, stating that it had contacted Brunson to get more information and that he "suggested that WPTE should not expect any further contact regarding the offer."

What the heck went on here? I'm sure the folks at Lakes Entertainment (Nasdaq: LACOE  ) , which owns 62% of WPTE, were left scratching their heads.

One thing is certain -- WPTE stock flew and then plummeted when the buyout offer dissipated as quickly as a mirage in the Vegas desert. Was the offer a fraud? A new twist on the old "pump and dump" scheme? Or was there real money behind the offer that suddenly dried up for as-yet-unknown reasons?

In my years of watching the markets, I've never seen an offer made to buy a company with no details included in the bid. Something just doesn't add up. Until the full details become clear, we can only speculate on the reasons behind the phantom offer.

For more great Foolishness on The World Poker Tour (no bluffing!), check out:

Fool contributorLawrence Meyers does not own stock in any companies mentioned. He is, however, fond of playing poker both online and in the flesh.

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