The acquisition of Golden Nugget Online Gaming from Fertitta Entertainment, Inc by DraftKings has been announced, with a price tag of $1.56 billion.
In a stock deal worth $1.56 billion, DraftKings has reached an agreement to acquire Golden Nugget Online Gaming. This strategic move will enhance DraftKings’ position as a prominent player in both the fantasy sports and online gaming industries.
Adding Golden Nugget to their portfolio, DraftKings will solidify their position as a major player in the New Jersey and Michigan markets, making them one of the leading brands in the industry. Despite already having a widely popular online casino, this strategic move will further enhance their dominance.
In a statement, Jason Robins, CEO and Chairman of the Board at DraftKings, expressed his excitement about the acquisition of Golden Nugget Online Gaming. He believes that this partnership will help them connect with a wider audience, particularly Golden Nugget’s dedicated customers who prioritize online gaming. The deal is expected to bring about significant benefits, including higher revenues from cross-selling, loyalty programs, and the expansion of tech-driven products. Additionally, there will be opportunities for optimizing technology and improving marketing efforts. Robins also expressed enthusiasm about Tilman’s involvement as a board member and major shareholder.
GNOG expressed that the merger between two industry leaders in digital sports, entertainment, and online gaming will greatly benefit shareholders by creating a leading global player. By combining Fertitta Entertainment’s broad entertainment offerings and extensive customer database with DraftKings’ vast network, this partnership is unbeatable. Together, they can offer unparalleled value to their combined customer base. GNOG believes that DraftKings is a top player in this growing industry and is thrilled to collaborate with Jason and the entire DraftKings family across their various assets, including the Houston Rockets, Golden Nugget casinos, and Landry’s extensive portfolio of restaurants. This agreement is commercially beneficial for both companies.
Both companies are believed to benefit equally from this deal, according to analysts.
After evaluating the agreement, Regulus Partners expressed that the strong presence of GNOG’s igaming operations in New Jersey is a valuable addition to DK’s business model, which currently lacks significant operational leverage.
GNOG’s extensive experience in online gaming operations presents a promising opportunity for synergies with DK. As the market matures and becomes more segmented, adopting a multi-brand strategy seems logical. Moreover, since the transaction is entirely paper-based, it doesn’t pose any additional risk to DK’s hard-earned capital. GNOG’s contribution to DK’s valuation and cash flow is expected to be highly beneficial.
“Finding win-win deals is rare, especially among US-led transactions, but this one satisfies both criteria for us. It’s refreshing to finally share something positive for a change.”
What is included in the deal?
As per Bloomberg, DraftKings is set to restructure its holding company, resulting in Golden Nugget Online Gaming shareholders receiving 0.365 shares of DraftKings for each of their own. Fertitta, who currently holds a 46% stake in Golden Nugget Online Gaming, has agreed to retain the DraftKings shares allocated to him in the merger for a minimum of one year.
Tilman Fertitta, the current CEO and majority owner of Golden Nugget Online Gaming, will retain ownership of the Golden Nugget land-based business. Additionally, he is set to assume a position on the board of DraftKings.
Additionally, the agreement will encompass collaborations with the Houston Rockets basketball team and potentially entail the establishment of a sportsbook within the Toyota Center arena located in Houston.
The closure of the deal is anticipated to occur in the first quarter of 2022, pending regulatory approval.
Shares of Golden Nugget soared by 52% on the NYSE following the announcement of the acquisition.
