The esports entertainment company Allied Esports Entertainment, Inc. has announced that they have received an unsolicited acquisition offer from the casino owners Bally’s Corporation.
As part of the offer, Bally’s has offered to purchase all outstanding equity interests in the Allied Esports parent company. They have valued the assets and offered $100 million. This would require Allied Esports to cancel the sale of the World Poker Tour to investment group Element Partners.
The original deal
This January, Allied Esports agreed to sell all its poker-related business and assets to Element Partners. They agreed a deal with Element Partners for $78.25 million. $68.25 million of that is an up-front payment, while there is also a fully guaranteed 5% revenue share of World Poker Tour branded tournament entry fees, up to a maximum of $10 million.
This deal is expected to on or around March 30th, 2021, pending stockholder approval. Since this is an unsolicited offer and not a formal agreement between the two companies, Allied Esports still recommends to their shareholders that they approved the deal with Element Partners.
The release from the company
According to a release from the company:
“The Company’s Board of Directors, consistent with its duties and the Company’s obligations under its existing agreement with Element, will evaluate Bally’s proposal in due course. The Company and Element continue to discuss potential updates to the current terms of their agreement.
“There can be no assurance that the Company will enter into a definitive agreement with Bally’s or consummate any transaction with Bally’s.
“At this time, the Company’s Board of Directors continues to recommend to the Company’s stockholders the approval of the transaction with Element. The Company has filed with the SEC and mailed to its stockholders a Consent Solicitation Statement in connection with the Element transaction. If approved by the Company’s stockholders, and subject to satisfaction of other closing conditions, the transaction with Element would be expected to close on or about March 30, 2021.”
Will they accept the proposal?
While this is an unsolicited offer, Allied Esports has announced that they will take time to evaluate the proposal from Bally’s and has made it available for public viewing on the Securities and Exchange Commission (SEC) website.
It is clear that Allied Esports is in need of cash. The COVID-19 pandemic has severely affected their bottom line. They suffered major losses in the second quarter of 2020, they made a net loss of $10.9 million. In person esports betting operators and event organisers have been hit hard by the pandemic while online operators like Luckbox and Unikrn have seen a boom in their profits and user base.
It looks like larger corporation like Bally’s are seizing the opportunity that the current vaccinations are providing by purchasing major in-person events and operations that have been hit hard by the pandemic to set themselves up for a grand return when the world eventually opens back up and social distancing comes to an end. Bally’s has yet to make any major in roads into the esports market but if this proposal is accepted, they could place themselves ahead in the growing industry.