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Casino Mogul Tilman Fertitta Taking Golden Nugget Public via SPAC
By Jeff Osienya Feb 03, 2021 IndustryFertitta Entertainment Inc, the holding company behind the famed Golden Nugget Casinos is pursuing a public debut on the NYSE by merging with a blank-check company in a $6.6 billion transaction.Tilman Fertitta, the billionaire investor behind Golden Nugget – an iconic casino brand in USA’s casino gaming scene, announced that he is pursuing public listing for his Fertitta Entertainment holding company through a merger with FAST Acquisition Corp, a blank-check company. If you are a fan of the NBA, then the name Fertitta is likely a familiar one as he is also the owner of the Houston Rockets basketball team.
Fertitta Entertainment Inc is the parent company of the Golden Nugget Casino brand and the Landry’s chain of restaurants. Overall, Fertitta Ent Inc operates 5 casinos under the Golden Nugget name whereas Landry’s business consists of 600 restaurants which include Bubba Gump Shrimp Co, Morton’s Steakhouse, Del Frisco’s, McCormick & Schmick’s, and Landry’s Seafood.
Under this new arrangement, the two companies will effectively go public in a transaction estimated to be worth $6.6 billion. However, it’s important to note that Even though the Houston Rockets team is a subsidiary of Fertitta Entertainment after Fertitta bought it in 2017 for $2.2 billion, it will not be part of this deal.
FAST Acquisition Corp on the other hand is a blank-check company, or a Special Purpose Acquisition Company (SPAC) founded by Sandy Beall and Doug Jacob in March 2020 with a focus on the hospitality industry. The company is listed on the New York Stock Exchange under the ‘FST’ ticker symbol after raising $200 million in its IPO in August 2020.
While disclosing details about the definitive merger agreement with FAST on Monday, Fertitta expressed the conviction he had for his latest decision saying that;
Quote"I look forward to returning my Company to the public marketplace. After taking the Company private in 2010, we accomplished a lot. However, in today's opportunistic world, I determined that in order to maximize the opportunities in the gaming, entertainment and hospitality sectors, it was preferable to take my Company public.
A Highlight of the Fertitta-FAST Transaction
After the company debuts on the NYSE, Tilman Fertitta who is the sole owner of his holdings company will maintain his leadership role in the Golden Nugget and Landry’s realm, hence serving as the President, Chairman, and CEO of the new publicly listed company. Moreover, Fertitta will be the largest single shareholder of the merged public company, owning about 60% interest.
The $6.6 billion valuation of the Fertitta-FAST combination is hinged on two things; First, 9.25x of $648 million, the expected pro forma Adjusted EBITDA of Golden Nugget Casino business and Landry’s hotel chain for the 2022 financial year. Second, the value of 31 million Golden Nugget Online Gaming Inc (GNOG) shares which is going to be injected to complete the merger at a share price of about $18 per unit.
After the transaction is successful, the merged company is expected to have $200 million cash in trust if no redemptions take place going forward. On top of that, right before the deal is closed, institutional investors have agreed to invest about $1.2 billion more as PIPE to buy more FAST common stock at an agreed share price of $10 apiece. This money will then be channeled to operational costs, boost the newly merged company’s growth initiatives, and pay of some of the existing debt of the Golden Nugget and Landry’s business estimated to be at $4 billion.
Will 2021 Be Another Year of SPACs?
Going public via SPACs was all the rage last year for the gaming industry and from the look of things, the momentum of such public listings is still at top speed. In January 2021 alone, SPACs across all industries are said to have generated transactions worth about $26 billion. Even though these blank-check deals are from arrangements penned last year, 90 new companies have already begun their journeys as publicly traded entities last month.
SPACs are truly an exceptional way of helping companies go public as they avoid all the hoops and hurdles involved with an IPO, making the process faster and more streamlined. Fertitta himself cited the advantage of going for the blank-check option in his statement when discussing his latest venture as follows;
Quote"After I compared the opportunities provided by a transaction with FAST, versus the traditional IPO route, it became abundantly clear that we could access the capital markets with more certainty and speed if we did a deal with FAST. Working with Doug and Sandy has been a pleasure, and I truly appreciate their time and contribution to this process. At the end of the day, the decision to do a deal with FAST was a no-brainer."
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