Golden Nugget Online Gaming set for Nasdaq debut

Leading US iGaming operator Golden Nugget Online Gaming (GNOG) is set to become a publicly traded company after entering into a purchase agreement with special purpose acquisition vehicle Landcadia II.

Tilman Fertitta-owned GNOG is the iGaming arm of land-based casino operator Golden Nugget and is being acquired by Landcadia II, a listed company on New York’s Nasdaq market which is co-sponsored by Fertitta Entertainment and Jefferies Financial Group.

The acquisition is expected to complete during the third quarter of this year and will see Landcadia II change its name to Golden Nugget Online Gaming, with its Nasdaq trading symbol changing to GNOG.

“GNOG is one of the best positioned companies to capitalize on this massive online gaming opportunity in the US,” said Rich Handler, co-chairman of Landcadia II and CEO of Jefferies. “We at Jefferies couldn't be more thrilled to partner with Tilman and bring this great opportunity to the public markets.”

GNOG has been the leading online casino operator since launching in New Jersey in Q4 2013, and was the first to introduce live dealer games into the market. It became profitable in 2016 and generated net income of over $11m in 2019.

The company has also obtained market access into Pennsylvania and Michigan, subject to regulatory approval, and expects to launch its online casino brand in both markets in early 2021.

Following completion of the transaction, Fertitta will remain GNOG chairman and CEO, with Thomas Winter continuing to serve as president.

During the seven years since Winter was brought in to develop Golden Nugget's online gaming business, revenue and profitability have grown each year, despite facing competition with greater financial resources.

“Golden Nugget is one of the most time-honored brands in the gaming business today,” said Fertitta. “When customers hear the name Golden Nugget, they know they are dealing with a trusted online gaming business.

“Thomas and his team have done a remarkable job, are the best in the industry, and with this transaction, will have access to growth capital to allow for the rapid expansion of the business.”

The transaction values the combined company at a pro forma enterprise value of approximately $745m, or 6.1x GNOG's estimated 2021 revenue of $122m.

The consideration payable to the parent entity of GNOG will consist of a combination of cash and rollover equity in Landcadia II, which will assume $150m of GNOG debt and will pay down at closing an additional $150m of its debt, plus pay prepayment fees, transaction fees and expenses. After this, the combined company will have at least $80m on its consolidated balance sheet.

The transaction will require the approval of a majority of the outstanding shares of Landcadia II, excluding shares beneficially owned by Tilman Fertitta and Jefferies Financial Group, and is subject to customary closing conditions, including certain regulatory approvals.