Mandalay
Media Announces Proposal to Acquire World Poker Tour for $35 million in Cash and
Stock; $1.69 Per Share
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Source:
Mandalay Media, Inc.
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On
12:30 P.M. Pacific Time, Thursday, October 29,
2009
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LOS
ANGELES—Mandalay Media, Inc. (OTC Bulletin Board: MNDL) today announced that it
has submitted a proposal to the Board of Directors of WPT Enterprises, Inc.
(NASDAQ:WPTE) to acquire WPT for $35 million in cash and
stock. Shareholders would receive cash and stock of $1.69 per share,
based on WPT’s recent outstanding shares and disregarding
options. The proposal represents a premium of approximately 54% over
the closing price of WPT’s common stock on October 26, 2009 and a premium of
approximately 23% over the implied value at closing of WPT’s pending asset sale
with Peerless Media Ltd.
In a
letter to WPT’s Board of Directors, Mandalay’s Co-Chairman Robert Ellin stated
that Mandalay proposal is a “Superior Proposal” as that term is defined under
the asset purchase agreement with Peerless.
Mandalay
stated that the proposed asset sale with Peerless provides no payment or
distribution of any kind to WPT’s shareholders. In contrast, the
Mandalay proposal would provide significant cash and stock directly into the
hands of WPT shareholders.
In
addition, Mandalay stated that in order to enable the WPT board of directors to
comply with its fiduciary duties to give serious consideration of the Mandalay
proposal, Mandalay urged the board of WPT to postpone the Special Meeting of
Shareholders currently scheduled for October 30, 2009. Mandalay has
asked to meet with the WPT board as soon as possible.
The full
text of the letter, dated October 28, 2009, follows:
[Letterhead
of Mandalay Media, Inc.]
The
Board of Directors
WPT
Enterprises, Inc.
5700
Wilshire Blvd. Suite 350
Los
Angeles, California 90036
Re: Cash and Stock Proposal at
$1.69 per share
Dear
Members of the Board:
Since
the announcement of your proposed asset sale with Peerless Media (Peerless),
Mandalay Media, Inc. (OTC—BB: MNDL) (Mandalay) has given serious consideration
to a combination of Mandalay and WPT Enterprises, Inc. (WPTE). We
believe a strategic combination of Mandalay and WPTE would deliver significant
value to our respective shareholders, and position the combined company for
substantial future growth.
By
this letter, we are proposing a transaction that provides WPTE’s shareholders a
significant premium over both WPTE’s current market price and the current value
of the Peerless transaction. There is no doubt that our offer is a
“Superior Proposal” as that term is defined under your asset purchase agreement
with Peerless. Accordingly, we would like to meet with you as soon as
possible to discuss the terms of our offer in greater detail. In
addition, in order to enable the WPTE board of directors to comply with its
fiduciary duties to give serious consideration of our proposal, we urge the
board to postpone the Special Meeting of Shareholders currently scheduled for
October 30, 2009.
As
you know, the proposed asset sale with Peerless provides no payment or
distribution of any kind to WPTE’s shareholders. In addition, as
WPTE’s proxy materials make clear, WPTE has no present intention or plan to
conduct any stock repurchases or otherwise distribute either the proceeds of the
Peerless sale or WPTE’s excess cash to shareholders, even though WPTE would no
longer have any material operating assets.
In
contrast, our proposal would provide significant, immediate cash and stock
directly into the hands of your shareholders, and values WPTE significantly
higher.
Under
our proposal, which has no financing contingency, Mandalay and WPTE would
combine and WPTE shareholders would receive, in the aggregate, approximately $35
million in stock and cash, consisting of: (i) $10 million in Mandalay common
stock, plus
(ii) $25 million of cash. On a per share basis, had we closed on
October 22, 2009 (when our stock closed at $.50 per share), and using your
August 12, 2009 outstanding shares of 20,603,333, each share of common stock of
WPTE would be converted into the right to receive approximately $1.69 per share
as follows: (1) $1.21 in cash plus (2) .97 shares
of Mandalay common stock, having an implied value of $.485 per WPTE
share. The actual number of shares of Mandalay to be issued will be
determined as of prior to closing, but the total value of the stock component
will be fixed at $10 million. Our proposal assumes no material change
in WPTE’s assets and liabilities.
Based
on October 26, 2009 closing prices, our offer represents a 23% premium over the
value at closing of your proposed asset sale with Peerless and a 54% premium
over WPTE’s closing price.
We
expended substantial effort in developing this value on the basis of
publicly-available information. Once we have the opportunity to
conduct due diligence of non-public information and to negotiate with
representatives of WPTE we can confirm the value we ascribe to WPTE. To that
end, we would be prepared to enter into an appropriate confidentiality
agreement. We expect to conclude all due diligence within 10 days
after receiving a short list of requested materials.
We
believe that your shareholders would find this proposal compelling, and to that
end, though this is not a binding offer, we are prepared to move quickly toward
the negotiation and entry into a mutually acceptable transaction agreement with
you.
Mandalay
Media is a global publisher and distributor of branded entertainment for 3G
mobile networks, including images, video, TV programming, and
games. With distribution in 40 countries through 120 major mobile
operators, it offers over 400 branded WAP sites, chat services, and customized
video clips. Additionally, Mandalay Media distributes more than 150
mobile game titles from content partners such as Sony, Taito, THQ, Digital
Chocolate, THQ, and others. Its patented Play For Prizes platform is
available on Verizon, AT&T, Sprint, and Virgin Mobile, and includes
titles such as Wheel of Fortune, Jeopardy, Frogger, and Jewel
Quest.
We
believe the strategic rationale for combining Mandalay Media and WPTE is
compelling for a number of reasons:
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Mandalay Media has the
management team, seasoned veterans and strategic relationships necessary
to lead the company in its multiple service offerings and distribution
channels.
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Mandalay Media will cultivate
and expand long-term global contracts for its television
content.
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Mandalay Media can leverage
its mobile platform and operator relationships throughout the
world to provide a full mobile social media and sports / poker playing
experience.
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Mandalay Media will tap into
Facebook and additional social media websites to develop and publish a
more compelling and branded next generation poker experience that
currently offered.
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Mandalay Media through its
existing platform technologies can provide a “connected” game experience
for the internet as well as third screens (mobile
phones). Players can always be part of the WPT community
wherever they are.
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Mandalay Media through its Play for
Prizes platform is uniquely positioned to deliver mobile and
internet skill with prizes game play. As gambling
becomes legal, we will already be positioned to immediately offer that
functionality to the WPT
community.
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Although
the majority of our proposal consists of cash, we wish to call your attention to
some of the reasons we believe Mandalay’s common stock is
attractive. Mandalay recognizes annualized revenue of $40
million. With the expected synergies and cost savings from the
combination of the two public companies, we expect annual revenues and EBITDA of
the combined company to exceed $60 million and $8 million, respectively,
starting from the closing.
We
expect that the combined company will be listed on Nasdaq’s capital market, with
a larger market capitalization, greater following and enhanced liquidity for
shareholders.
Our
interest in this transaction is a reflection of our firm belief that a
combination of our companies would be highly beneficial financially to both of
our shareholder groups and accretive to Mandalay’s earnings per
share. In sum, we believe our proposal is superior to your proposed
transaction with Peerless based on its higher current value, and the opportunity
for WPTE shareholders to share in the enhanced prospect of growth of a stronger
combined franchise.
The
Board of Directors of Mandalay has unanimously approved this proposal and has
authorized our management team to proceed.
We
would like to meet with you before the scheduled shareholders meeting to discuss
our proposal in greater detail. In any event, whether or not a
meeting can be arranged before Friday, we urge you to postpone your shareholders
meeting to allow full and serious consideration of our
proposal. Please feel free to contact Robert Ellin at Mandalay Media,
Inc. at 310 601 2500 or to have your financial or legal advisors contact Mr.
Ellin regarding the matters set forth herein. We look forward to meeting with
you soon.
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Sincerely,
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Mandalay
Media, Inc.
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By:/s/
Robert Ellin
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Co-Chairman
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About
Mandalay Media, Inc.
Managed
by leading media and technology industry executives, MNDL’s mission is to build
a unique combination of new media distribution and content companies through
acquisitions with domestic and foreign businesses with strong management teams
and historical financial performance. Through its wholly-owned subsidiary
Twistbox Entertainment, Inc. (“Twistbox”), MNDL is a leading global producer and
publisher of mobile entertainment. Twistbox has exclusive licenses with
industry-leading brands, direct distribution with more than 120 wireless
operators in over 45 countries and provides an extensive portfolio of
award-winning games, WAP sites and mobile TV channels. Its wholly-owned
subsidiary AMV Holding Limited is a European leader in direct-to-consumer mobile
Internet content and services.
For more
information, please visit www.mandalaymediainc.com
or www.twistbox.com.
Statement
on Cautionary Factors
This
announcement is neither an offer to purchase nor a solicitation of an offer to
sell securities of WPT Enterprises, Inc. Subject to future developments,
additional documents regarding a transaction with WPT Enterprises, Inc. may be
filed with the Securities and Exchange Commission (the "Commission") and, if and
when available, would be accessible for free at the Commission's website at
www.sec.gov.
Investors and security holders are urged to read such disclosure documents, if
and when they become available, because they will contain important information.
The disclosure documents may also be obtained for free from Mandalay Media,
Inc., if and when available, by directing a request to Mandalay Media, Inc.,
2121 Avenue of the Stars, Suite 2550, Los Angeles, CA 90067, Attention: Investor
Relations.
No
assurance can be given that the proposed transaction described in this press
release will be successfully completed, or completed on the terms proposed or
any particular schedule, that the proposed transaction will not incur delays in
obtaining any approvals required for a transaction or that we will realize the
anticipated benefits of any proposed transaction.
This
press release contains forward-looking statements about MNDL within the meaning
of the Private Securities Litigation Reform Act of 1995, including statements
about the proposed acquisition of WPT Enterprises, Inc. Statements including
words such as "estimate", "expect", "anticipate" or "believe" and statements in
the future tense are forward-looking statements. These forward-looking
statements are subject to risks and uncertainties that could cause actual events
or actual future results to differ materially from the expectations set forth in
the forward-looking statements. Some of the factors which could cause t MNDL’s
results to differ materially from the expectations include the following:
consumer demand for the MNDL’s products; consumer spending trends; fluctuations
in the currencies of the countries in which MNDL operates against the US dollar;
timely development and release of MNDL’s products; competition in the industry;
the MNDL’s ability to manage expenses; MNDL’s ability to manage and sufficiently
integrate acquisitions of other companies; adverse changes in the securities
markets; and other factors described in our filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for the fiscal
year ended March 31, 2009. MNDL does not undertake, and specifically disclaim
any obligation, to release publicly the results of any revisions that may be
made to any forward-looking statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such
statements.