I am far enough behind on CFA studying that I have not yet learned how to do a DCF (is that on Level I?), but I’m pretty sure that even at Level IV you might have trouble modeling this acquisition:

Laurent Tapie, Managing Director of ‘Groupe Bernard Tapie’ announced today that the group has signed an exclusive agreement with the Board of Directors of Full Tilt Poker to acquire the company and all of its associated assets.

This agreement, which includes the repayment of Full Tilt Poker’s world-wide players in full, is subject to several conditions; the first of which is a favorable resolution with the United States Department of Justice. Discussions with the United States Department of Justice will begin immediately.

Full Tilt’s awesome lawyer, previously in the news for pointing out that Full Tilt was not a Ponzi scheme so much as it was just a regular scheme, wants to make sure no one gets their hopes up too much about this news:

Barry Boss, a lawyer for the corporate entities behind Full Tilt, stressed that the agreement announced Friday was merely a prelude to a formal acquisition, pending resolution of the civil suit. Nevertheless, he said, “It’s a significant development and one that definitely gives a renewed since of optimism that the players will get paid.”

Quite! A “favorable resolution” of the lawsuit looks challenging, given that DOJ’s objections to Full Tilt don’t stop at “Ponzi scheme” but extend to embezzlement of client funds, evading banking regulations, and also, while we’re at it, online poker as a line of business generally. This may be like agreeing to buy a drug cartel just as soon as it clears up its unpaid parking tickets.

But assuming that Groupe Bernard Tapie signed this agreement because they actually intend to buy Full Tilt … why? Again, I’m no expert on poker site valuation, but I’m going to guess that Tapie is paying at least $0 for the equity ownership of the site. (“At least,” not “more than.” I’d guess that $0 is the most likely price for Full Tilt.) According to the Department of Justice, as of March Full Tilt had only $60 million in cash to cover $390 million in player accounts. Meaning that if you bought the Full Tilt equity for $0, you’d be assuming $330 million of more or less demand deposits to get … what?

Some poker-site software, which is worth something, but probably not hundreds of millions of dollars. A brand name and customer list, but … if Netflix started charging you $5 a month to use your BofA debit card, it couldn’t generate a millionth of the ill will that Full Tilt has from its customers.

Which leads to one of two conclusions: (1) an list of email addresses and bank accounts of people, even pissed-off people, who’ve previously fallen for a Ponzi scheme is even more valuable than you might suspect (think about this), or (2) Full Tilt actually isn’t a Ponzi scheme, or any sort of embezzle-player-funds scheme, at all.

Happily, the answer seems to be (2): it looks like the missing Full Tilt player money was not swiped mainly by its operators, but by the DOJ, which apparently is holding $331 million in seized player funds that Tapie hopes to get back to players (and which, strangely, the DOJ did not mention in its press release about Full Tilt being a Ponzi). That $331 million, coincidentally, should get Full Tilt to about flat, meaning that it might actually be worth something. And meaning that Barry Boss might have been right to take offense at the Ponzi scheme label.

Troubled Poker Site May Be Bought by French Entrepreneur [NYT]

Full Tilt Poker and Groupe Bernard Tapie Sign Acquisition Agreement [press release / PokerStrategy.com, via Kid Dynamite]