World Poker shares up on top player's bid

NEW YORK (Reuters) - U.S. poker champion Doyle Brunson has dealt a $700 million cash bid to WPT Enterprises Inc. just days after the company known for its World Poker Tour television show launched an online gaming site.

Market rumors of the bid, which was later confirmed by WPT, sent its shares surging almost 50 percent on Friday to close at a high of $26.50, after hitting $29.50 during the day.

The unsolicited bid from Brunson and a team of unidentified financial backers offers a 100 percent premium over Thursday's Nasdaq closing price of $17.75 which valued WPT at about $357 million but analysts said the offer did not seem outlandish.

"There are always people asking questions about whether WPT is for sale but this came as a surprise. It's the first time we've received an offer on paper," chief executive Steven Lipscomb, who co-founded the company in 2002, told Reuters.

"But the term sheet was so vague with no terms...and we're trying to get information as quickly as we can so we can make an assessment of what the offer is and if it's credible."

Lipscomb, who owns about 8 percent of WPT, said the board had given the company approval to look into the deal but did not comment on its merits. The company is seeking further details from Brunson's lawyers.

U.S. resort casino operator, Lakes Entertainment Inc. (Nasdaq:LACOE - news), which is WPT's co-founder and largest shareholder with a 62 percent stake, said it was reviewing the offer.

Lakes shares rose almost 22 percent to $18.09 on Friday.

Brunson, 71, one of the best known U.S. professional poker players, could not be contacted and his lawyers did not return calls. He is in Las Vegas playing the World Series of Poker. HIGH STAKES?

Nicknamed "Texas Dolly" after his native state, Brunson is acclaimed by fans as the best poker player of all time. He has won a record 10 World Series of Poker events and his book, "Super System," is regarded by some as the "bible" of poker.

Brunson was the first of the high stakes hotel poker players in Las Vegas, turning to cards when a basketball career with the Minneapolis Lakers ended after he shattered his leg in an accident at a gypsum factory. He still uses a crutch.

Analysts said the offer may seem high on the surface but was not necessarily so when looking at WPT's business model.

Poker has become a big money-spinner for Internet gambling companies which estimate the world Internet gambling market between $7 billion and $12 billion a year, with 20 percent annual growth.

"WPT entered the online wagering market two weeks ago and given its brand and size of the market this could be a small offer," said analyst David Bain from Merriman Curhan Ford.

WPT will complete against PartyGaming, (PRTY.L) the industry's top player which went public last month in London's biggest float in five years, and against Sportingbet (SBT.L), which both offer real-money poker and casino games online.

But Bain said it would be hard to evaluate the bid as WPT's potential earning power was not reflected in analysts' models with its online earnings as yet unknown. Bets can only be taken from overseas as U.S. authorities do not allow online gaming.

Merriman Curhan estimates WPT will earn 20 cents a share in fiscal 2005 ending January next year and 65 cents for 2006 but Bain said it had the earning power to beat $2 a share.

In fiscal 2004, WPT posted earnings of 4 cents a share.

The West Hollywood, California-based company went public in August last year at $8 a share, raising $32 million. WPT develops products based on gaming with World Poker Tour airing on U.S. Travel Channel and over 60 markets worldwide.