DraftKings to Acquire Golden Nugget Online Gaming for $1.5 Billion
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On Monday, DraftKings announced it would be purchasing Golden Nugget Online Gaming for about $1.56 billion in stock acquisitions. This agreement will also provide DraftKings with a key partnership with Fertitta Entertainment. This partnership will provide DraftKings with an existing online gaming presence of over 5 million customers and help DraftKings reach a broader consumer base for its online casino games. The purchase is expected to close in the first quarter of 2022.
About Golden Nugget Online Gaming
Golden Nugget Online Gaming, Inc. is one of the leading online gaming companies and was the first company to bring Live Dealer and Live Casino Floor to the United States online gaming market. GNOG received 15 eGaming Review North America Awards, including the “Operator of the Year” award from 2017-2020. Golden Nugget Online Gaming currently operates in New Jersey and Michigan and targets Pennsylvania, Illinois, West Virginia, and Virginia as potential states for future expansion.
Partnership with Fertitta Entertainment
Fertitta Entertainment is multinational gaming, restaurant, hospitality, sports, and entertainment company based in Houston, Texas. Fertitta Entertainment is the holding company for Tilman J. Fertitta’s assets and is a parent company to Golden Nugget, LLC and Landry’s LLC. Fertitta Entertainment will provide DraftKings with new marketing avenues for customer acquisition, sponsorships, and an expanded retail sportsbook presence.
Along with Golden Nugget/Landry’s, Fertitta Entertainment is also the parent company to the NBA franchise, the Houston Rockets. As part of this partnership, DraftKings will become the exclusive Daily Fantasy Sports (DFS), sports betting, and iGaming partner of the Houston Rockets and has set in motion plans to open a retail sportsbook at the Toyota Center, the Rockets’ home court, once the state of Texas has approved legislation for sports betting.
Tilman Fertitta described his excitement about offering “value to our combined customer base that is unparalleled.” He spoke about his belief that “DraftKings is one of the leading players in this burgeoning [sports betting] space,” and the partnership with Fertitta Entertainment is a “strong commercial agreement for both companies.”
Strategic Benefits of the Acquisition
DraftKings and Fertitta Entertainment expect their partnership to generate savings of approximately $300 million through synergies between the companies. DraftKings’ in-house technology provided by SBTech will save costs for Golden Nugget Online Gaming. Additionally, DraftKings will capitalize on more efficient marketing and diminished general and administrative costs.
DraftKings will also expand its iGaming offerings, including an in-house live dealer and improved consumer-driven experience on their online casino. DraftKings customers will access new VIP and promotional offerings from the impressive Fertitta Entertainment collection of hospitality and entertainment brands.
Jason Robins, the CEO and Chairman of the Board for DraftKings described how “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.”
Stock Implications
Golden Nugget Online Gaming stock (NASDAQ: GNOG) was up over 50% on Monday, while DraftKings stock (NASDAQ: DKNG) was up over 2%. As part of this transaction, Golden Nugget Online Gaming shareholders will get 0.365 shares of DraftKings per share of GNOG owned. The deal is valued at about $18.83 per share, roughly a 53% premium over Golden Nugget Online Gaming’s closing price on Friday.
Tilman Fertitta, the CEO of Golden Nugget Online Gaming, owns 46% of the company. As part of this transaction, he has agreed to continue holding the DKNG shares issued to him for at least a year after the transaction closes. Fertitta will also join the DraftKings board to advise on corporate matters.
DraftKings and Golden Nugget Online Gaming will form a new holding company called “New DraftKings” that will be the official new name at the transaction’s closing. The all-stock nature of this agreement “preserves DraftKings’ balance sheet and aligns the long-term interests of both brands and shareholders,” according to the DraftKings website.
Advisors
DraftKings and Golden Nugget Online Gaming used several legal and financial advisors in this agreement. Raine Group served as the exclusive financial advisor, and Sullivan & Cromwell LLP is the legal counsel to DraftKings. Jefferies LLC is providing financial advisory to Golden Nugget Online Gaming. White & Case LLP is serving as the legal counsel, and Spectrum Gaming Capital is the financial advisor to the Special Committee of the board of Golden Nugget Online Gaming.
Conference Call Information
DraftKings and Golden Nugget Online Gaming will host a webcast for investors on Monday, August 9, 2021, at 8:30 AM EST to provide more information on this transaction. Investors can join the call by visiting investors.draftkings.com or dialing (833) 644-0686 for domestic callers or (918) 922-6762 for international callers. Once connected with the operator, provide the conference ID of 6795112.
