In Super/System 2, the new 650-plus-page poker bible published earlier this year, poker legend Doyle Brunson spent an entire paragraph lamenting his missed opportunity to buy into WPT Enterprises (NASDAQ:WPTE), the media company behind the World Poker Tour, at the company's inception. Maybe he's looking for a second chance, or maybe he's just looking for an upgrade over his own poker site, doylesroom.com. Whatever the case, WPT confirmed on Friday a New York Post article stating that Brunson and a group of financial backers had made an unsolicited bid to buy the whole company for $700 million in cash.
That's a hefty offer. It was double WPT's price of $17.75 per share at Thursday's close. And the news boosted WPT shares by 56% in Friday afternoon trading. Lakes Entertainment (NASDAQ:LACOE), which owns 62% of WPT, also saw its shares climb 20% to $17.74 on Friday.
The bid comes as the championship "No Limit Hold 'Em" event of the Harrah's Entertainment (NYSE:HET) 2005 World Series of Poker -- an event that Brunson won in 1976 and 1977 -- is going on at the Rio in Las Vegas. And it comes just a couple of weeks after the debut of the WPT Online site. Doyle certainly regrets not buying a piece of the company that covers the biggest events in poker aside from the World Series of Poker, and his current bid suggests a bold bet on the popularity of online gaming in general, and online poker in particular.
PartyGaming, which had its initial public offering last month, owns Party Poker, by far the No. 1 online poker site. But even though WPT Online will not accept wagers from U.S. players, WPT's powerful brand, and the increasingly considerable reach that its TV show is generating, should give the upstart a long-run advantage over the poker sites of other second-best players, including that of Motley Fool Hidden Gems selection Cryptologic (NASDAQ:CRYP) -- another prominent player that does not accept U.S. wagers. And even more attractive is WPT's eBay (NASDAQ:EBAY)-like business model, which requires little capital investment and should generate healthy margins and scaling profits.
But despite WPT's reasonable profitability for a bright future, Brunson would be paying out a lot of money for a company with no previous profit record. On the other hand, that's certainly not out of character for Brunson, who has become a legend by being bold and aggressive. And he knows what he is getting: He has included a 20-page section of Super/System 2 devoted to WPT.
For WPT shareholders, I think the offer is worth consideration, since it offers healthy short-term compensation and eliminates the risk of business failure.
For more from Jeff Hwang on WPT, poker, and investing, check out:
- WPT Enterprises Worth a Bet?
- WPT's Promising Poker Hand
- From Poker to Investing: 10 Tips From the MCU
- From Poker to Investing: Always Look Ahead
- From Poker to Investing: Don't Chase Losers
Fool contributor Jeff Hwang owns shares of eBay, a Motley Fool Stock Advisor selection. The Motley Fool has a disclosure policy.
