November 13, 2013 5:07pm PT by Alex Ben Block
Game Show Network Sues After Gaming Company Cancels Acquisition
The Game Show network filed a lawsuit Wednesday for breach of contract and other claims over a deal it had negotiated to buy Bash Gaming. GSN was prepared to acquire the gaming company, which makes casino games for social and mobile platforms, for as much as $160 million.
The suit filed in Los Angeles Superior Court says that after extensive negotiations, and after a deal had been agreed on verbally and in principle, Bash pulled out on Oct. 30 -- at the last possible second -- and instead made a deal for a sale of the company and its subsidiary in India to an unidentified third-party buyer.
The suit seeks to enforce the terms of the sale agreement to GSN and asks for damages of at least $25,000 plus other costs, and an amount equal to the difference between what it was to pay for Bash and what the third party is paying, which would have been its immediate upside in the value of the transaction.
Game Show Network, a joint venture between Sony Corp. and DirectTV, filed the suit against Bash Gaming, aka Bitrhymes Inc., and its executive Sumit Gupta and The Raine Group and its executive John Salter.
Raine is described in the suit as a global merchant bank focused on digital, media, entertainment, sports and lifestyle sectors, based in Palo Alto, Calif. Salter and Raine were Bash’s investment advisor.
According to the suit, negotiations for GSN to buy Bash, whose top seller is a cross-platform bingo gaming product -- Bingo Bash -- began in summer 2012. GSN said it wanted to acquire Bash to expand its reach to mobile customers.
In March 2013, Raine got involved and provided GSN with information on the company and a framework for a deal, which was memorialized in a written expression of intent. At that time the deal was for $65 million in cash and a $65 million “earn out” from company revenue. Bash also promised not to negotiate a deal with anyone else prior to the closing.
A Sony committee approved the deal but then in October, Salter told GSN’s CEO David Goldhill that there was another offer. GSN than raised its offer to $80 million in cash and an $80 million payout, and on Oct. 14 the deal was back on.
Sony approved the revised deal, which included some additional perks, including $1 million salaries for the two founders of Bash: Sumit and Vikas Gupta. The deal was confirmed again in a phone call with Sony Corp. of America CEO Michael Lynton.
A final agreement was reached Oct. 18 and both sides set out for a quick closing. Then on Oct. 30, Sumit Gupta told Goldhill that Bash had instead accepted another offer.
There was no response to requests for comment from Bash and its executives or Raine and its advisors.