As a preface to this analysis I truly feel that some of the operators in this business need to start acting like professionals and a little less like snake oil salesmen. It appears that the largest share holder at BetCorp, according to a reliable source, was feeding Ken Weitzner details about a buyout that should never have been discussed in an open venue. What this shareholder was thinking when he did this is beyond us at MajorWager. This caused the stock to accelerate by more than 50% before the announcement was made. These deals make this industry look seedy at a time when everyone should do their best to behave in a professional fashion. I am sure there will be an investigation as to how Weitzner got insider information, but more than that, what would have prompted him to publicly release insider information. The information disseminated was known by most people connected in this industry but in order not to put peoples post up money at risk, most had the sense not to disclose anything and let the deal hatch naturally.
The information that Weitzner was releasing was so erroneous that Calvin Ayre needed to step in and comment on the proceedings. Something that we can presume he did not wish to do. Speculating aside, once again, Bodog is in the middle of a horse and pony show except this time it is a horse and donkey show, through no fault of their own. Hopefully the AIM overlooks these proceedings as they have with the Sportingbet deal which is another deal with fiducially questionable aspects. But that is another issue.
In reading the BetCorp release, it appears that Bodog has assumed all liability of Betcorp's US facing business. In return for that, Bodog has acquired the database and accounts of all US customers from all BetCorp properties. Clearly as stated in the release, Bodog has no rights to use the names or intellectual property of any of BetCorp's US facing companies.
"The Purchaser has also undertaken not to use any URL, trade mark, brand name or other intellectual property acquired from the Group to provide services to United States residents, following its purchase of the Gaming Operations."
The other interesting part of this deal, that it is not clear to me, is if the post up is included in the 9 million or if that is over and above the current liabilities of Betcorp.
"In addition to the cash consideration receivable of up to US$9 million, the Purchaser is also assuming the net current liabilities of the Gaming Operations and has undertaken to honour the existing employment rights of employees and the Group's obligations to its customers."
According to the press release, Bodog's obligations to BetCorp's customers are over and above the 9 million offered. The real question at hand is whether or not BetCorp had the players post up money on hand. It has been confirmed by both the Purchaser and reliable sources that ,yes indeed, they had the post up money on hand.
It will be interesting to watch this deal unfold now that it has been made public. It will also be interesting to see who bought all the stock to drive the shares up 57% before any announcement was made.