DraftKings agrees $1.6bn deal to acquire Golden Nugget Online Gaming

9th August 2021 1:22 pm GMT

New York-listed sports betting and fantasy sports operator DraftKings has entered into a definitive agreement to acquire US online casino operator Golden Nugget Online Gaming in an all-stock deal worth $1.56bn.

The acquisition will allow DraftKings to leverage Golden Nugget’s well-known brand, iGaming product experience and existing combined database of more than 5m customers, the company said.

“Our acquisition of Golden Nugget Online Gaming, a brand synonymous with iGaming and entertainment, will enhance our ability to instantly reach a broader consumer base, including Golden Nugget’s loyal ‘iGaming-first’ customers,” said DraftKings CEO and chairman Jason Robins.

“This deal creates meaningful synergies such as increased combined company revenues driven by additional cross-sell opportunities, loyalty integrations and tech-driven product expansion as well as technology optimization and greater marketing efficiencies. We look forward to Tilman being an active member of our Board and one of our largest shareholders.”

As part of the transaction, DraftKings will undergo a holding company reorganization and form a new holding company, New DraftKings, which will become the going-forward public company for both DraftKings and GNOG. New DraftKings will be renamed DraftKings Inc at closing.

GNOG shareholders receive a fixed ratio of 0.365 shares of New DraftKings’ Class A common stock for each share of Golden Nugget Online Gaming they hold. GNOG chairman and CEO Tilman Fertitta, who beneficially owns 46 per cent of the equity in GNOG, has agreed to continue to hold the DraftKings shares to be issued to him in the merger for a minimum of one year from the closing of the transaction.

The acquisition is expected to deliver synergies of $300m at maturity, with DraftKings to deploy a multi-brand strategy which will enhance cross-sell opportunities and drive increased market share and revenue growth.

In addition, the enlarged company will look for cost savings by eliminating platform costs as a result of migrating Golden Nugget’s current technology to DraftKings’ in-house proprietary platform, recognizing enhanced returns on advertising spend through marketing efficiencies, and reducing costs such as duplicative corporate overhead.

“This transaction will add great value to the shareholders as two market leaders merge into a leading global player in digital sports, entertainment and online gaming,” said Fertitta. “Leveraging Fertitta Entertainment’s broad entertainment offerings and extensive customer database, coupled with DraftKings’ mammoth network makes this an unbeatable partnership.

“Together, we can offer value to our combined customer base that is unparalleled. We believe that DraftKings is one of the leading players in this burgeoning space and couldn’t be more excited to lock arms with Jason and the DraftKings family across our entire portfolio of assets, including the Houston Rockets, the Golden Nugget casinos and Landry’s vast portfolio of restaurants. This is a strong commercial agreement for both companies.”

In connection with the acquisition, DraftKings has reached an agreement regarding a separate commercial deal with Fertitta Entertainment, which will include marketing integrations, sponsorship assets with the Houston Rockets, an expanded retail sportsbook presence, and the optionality to obtain market access on favorable terms through certain Golden Nugget casinos.

DraftKings will also become the exclusive daily fantasy sports, sports betting, and iGaming partner of the NBA’s Houston Rockets and intends to open a sportsbook at the team’s Toyota Center stadium in Houston, pending state legalization and regulatory approvals.

The transaction is subject to approval by Golden Nugget Online Gaming stockholders, the receipt of required regulatory approvals and other customary closing conditions, and is expected to close in the first quarter of 2022.

The approval of the transaction by Golden Nugget Online Gaming stockholders is expected to be obtained through a written consent to be provided by Tilman Fertitta. DraftKings' board has also approved the transaction.

Shares in Draftkings Inc (NASDAQ:DKNG) will open for trading at $51.59 per share in New York Monday, having gained 3.18 per cent in pre-market trading, while shares in Golden Nugget Online Gaming Inc (NASDAQ:GNOG) soared by 52.97 per cent in pre-market trading.

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