- Acquisition deal to combine online sports betting with online casino gaming…
- Deal adds 5 million customers to DraftKings’ database…
- Both companies went public through SPAC mergers in 2020…
Golden Nugget Online Gaming Inc (NASDAQ: GNOG) rallies on some big acquisition news.
GNOG stock rose as much as 52% in today’s session and at writing, shares were trading 49% higher.
The jump comes after DraftKings Inc (NASDAQ: DKNG) and Golden Nugget announced they have entered into a definitive agreement for DraftKings to acquire Golden Nugget in an all-stock transaction.
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Merging Sports Betting and Online Gaming
The agreement values Golden Nugget Online Gaming at $1.56 billion.
DraftKings says this deal “will enable DraftKings to leverage Golden Nugget’s well-known brand, iGaming product experience and existing combined database of more than 5 million customers.”
On top of the acquisition, DraftKings has also entered into a commercial agreement with Fertitta Entertainment Inc.
Fertitta is the parent company of the Houston Rockets, Golden Nugget LLC, and Landry’s LLC.
DraftKings describes Fertitta as “a leader in the gaming, restaurant, hospitality, and sports entertainment industry.”
Jason Robins, DraftKings’ CEO and Chairman, said, “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.”
Tilman Fertitta, CEO and Chairman of Golden Nugget, said, “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.”
Nitty Gritty of the Deal
As part of this transaction, DraftKings will form a new holding company known as New DraftKings.
That holding company will become the new public company for both GNOG and DKNG.
At the close of the transaction, New DraftKings will be renamed DraftKings, Inc. and the stock will remain listed on the Nasdaq under the ticker DKNG.
Current GNOG shareholders will receive 0.365 shares of New DraftKings’ Class A common stock per share they own of GNOG stock.
That’s a 53% premium on the closing price of GNOG stock at $12.27 per share Friday.
Fertitta, who owns 46% of the equity in GNOG, has agreed to hold his DraftKings shares for at least one year after the deal closes and will join DraftKings’ board.
Both companies’ Boards have approved the transaction and GNOG shareholders must now vote to approve the acquisition.
The deal is expected to close in the first quarter of 2022.
Under the commercial deal with Fertitta Entertainment, DraftKings will receive preferred pricing with Golden Nugget-owned properties “and an exclusive commercial deal across daily fantasy sports, sportsbook, and iGaming with the Houston Rockets.”
The commercial agreement will also “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 Houston Rockets and intends to open a sportsbook at the Toyota Center, pending state legalization and regulatory approvals.”
DraftKings says it expects additional revenue from cross-promotion opportunities, “which will expand the Company’s customer base by engaging a loyal iGaming-first customer.”
The deal will bring Golden Nugget Online Gaming onto DraftKings’ in-house technology, thus eliminating GNOG’s current third-party platform costs.
DraftKings says its “technology-first approach will drive product enhancement through expanded offerings, including in-house live dealer, and an improved consumer-driven experience.”
DraftKings says it expects a higher return on investment by streamlining marketing strategies and efforts between the two brands.
“The agreement provides DraftKings new opportunities to deeply integrate with Fertitta Entertainment, Inc. and market to existing Golden Nugget customers through cross-selling products, in retail sportsbooks, and across Fertitta Entertainment, Inc. assets.”
“DraftKings customers will also have access to new VIP and promotional opportunities, including the ability to purchase discounted rewards and secure reservations using the DraftKings VIP rewards program, subject to a pricing agreement to be determined.”
About GNOG Stock
- Golden Nugget Online Gaming was founded in 2015 and is headquartered in Houston, TX.
- The company went public in a SPAC merger at the end of 2020.
- Golden Nugget is “a leading online gaming company that is considered a market leader by its peers and was first to bring Live Dealer and Live Casino Floor to the United States online gaming market.”
- GNOG was the recipient of 15 eGaming Review North America Awards, including “Operator of the Year” in 2017, 2018, 2019, and 2020.
- GNOG stock closed at $12.27 per share on Friday.
- The stock hit a daily high of $18.71 today.
- The company has a market cap of more than $956 million.
About DKNG Stock
- DraftKings was founded in 2012 and is headquartered in Boston, MA.
- The company went public in a SPAC merger in April 2020.
- DraftKings is “a digital sports entertainment and gaming company created to fuel the competitive spirit of sports fans with products that range across daily fantasy, regulated gaming, and digital media.”
- DKNG says it “is the only U.S.-based vertically integrated sports betting operator.”
- The company operates sports and gaming entertainment in 17 countries.
- Its online sports betting platform, DraftKings Sportsbook, is live with mobile and/or retail betting in 14 U.S. states.
- DraftKings is the official daily fantasy partner of the NFL, MLB, NASCAR, PGA TOUR, and UFC.
- It is an authorized gaming operator of the NBA and MLB, an official sports betting partner of the NFL, an official betting operator of PGA TOUR and the official betting operator of UFC.
- DKNG stock closed at $51.59 per share Friday.
- The stock opened at $52.50 per share today.
- DraftKings has a market cap of $20.9 billion.
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