Why DraftKings (DKNG) Is Buying Golden Nugget Online Gaming (GNOG) For $1.56 Billion

DraftKings Inc. (Nasdaq: DKNG) introduced it’s shopping for Golden Nugget Online Gaming, Inc. (Nasdaq: GNOG) in a deal valued at $1.56 billion. This is why.

DraftKings Inc. (Nasdaq: DKNG) and Golden Nugget Online Gaming, Inc. (Nasdaq: GNOG) introduced that they’ve entered right into a definitive settlement for DraftKings to accumulate Golden Nugget Online Gaming in an all-stock deal that has an implied fairness worth of roughly $1.56 billion. The deal will allow DraftKings to leverage Golden Nugget’s well-known model, iGaming product expertise, and current mixed database of over 5 million clients. In reference to the deal, DraftKings has entered right into a industrial settlement with Fertitta Entertainment, the guardian firm of the Houston Rockets, Golden Nugget, LLC and Landry’s LLC, and a pacesetter within the gaming, restaurant, hospitality, and sports activities leisure trade.
The deal of Golden Nugget Online Gaming will ship vital strategic advantages to DraftKings in addition to anticipated synergies of $300 million at maturity. And DraftKings will deploy a multi-brand technique that can improve cross-sell alternatives and drive elevated market share and income development. Plus there can be a number of channels for price financial savings by eliminating platform prices on account of migrating Golden Nugget’s present expertise to DraftKings’ in-house proprietary platform, recognizing enhanced returns on promoting spend via advertising efficiencies and lowering G&A prices akin to duplicative company overhead. 
The industrial deal can also be going to scale back DraftKings’ market entry charges via most popular pricing with Golden Nugget-owned properties and an unique industrial deal throughout every day fantasy sports activities, sportsbook, and that iGaming with the Houston Rockets which additional solidifies the deep partnership between DraftKings and Fertitta Entertainment. And the all-stock deal preserves DraftKings’ steadiness sheet and aligns the long-term pursuits of each manufacturers and shareholders.
DraftKings expects to see income uplift from further cross-promotion alternatives — which can broaden their buyer base by participating a loyal iGaming-first buyer. And there are anticipated income synergies via potential expertise and recreation growth, together with Live Dealer choices.
By bringing Golden Nugget Online Gaming onto DraftKings’ in-house expertise, DraftKings is anticipating to remove present Golden Nugget Online Gaming’s third-party platform prices, lowering working bills and vendor prices. And DraftKings’ technology-first strategy will drive product enhancement via expanded choices, together with in-house stay seller, and an improved consumer-driven expertise.
By streamlining advertising methods and efforts between the 2 manufacturers, DraftKings is anticipating to comprehend a better return on funding. And the settlement offers DraftKings new alternatives to deeply combine with Fertitta Entertainment, Inc. and market to current Golden Nugget clients via cross-selling merchandise, in retail sportsbooks and throughout Fertitta Entertainment belongings. Plus DraftKings clients can even have entry to new VIP and promotional alternatives, together with the flexibility to buy discounted rewards and safe reservations utilizing the DraftKings VIP rewards program, topic to a pricing settlement to be decided.
In reference to the deal, DraftKings has additionally reached an settlement concerning a separate industrial cope with Fertitta Entertainment throughout its asset portfolio, together with the Houston Rockets, Golden Nugget, LLC and Landry’s LLC. The industrial deal will embody advertising integrations, sponsorship belongings with the Houston Rockets, an expanded retail sportsbook presence, and the optionality to acquire market entry on favorable phrases via sure Golden Nugget casinos. And DraftKings can even develop into the unique every day fantasy sports activities, sports activities betting, and that iGaming associate of the Houston Rockets and intends to open a sportsbook on the Toyota Center, pending state legalization and regulatory approvals.
As a part of the deal, DraftKings will bear a holding firm reorganization and type a brand new holding firm New DraftKings — which can develop into the going-forward public firm for each DraftKings and GNOG. And the brand new DraftKings can be renamed DraftKings Inc. at closing (New DraftKings).
Under the phrases of the merger settlement , Golden Nugget Online Gaming stockholders would obtain a hard and fast ratio of 0.365 shares of New DraftKings’ Class A Common Stock for every Common Share of Golden Nugget Online Gaming they maintain on the report date (the Exchange Ratio). And Tilman Fertitta — who owns beneficially roughly 46% of the fairness in GNOG — has agreed to proceed to carry the DraftKings shares to be issued to him within the merger for no less than one 12 months from the closing of the transaction.
The Board of Directors of Golden Nugget Online Gaming (the GNOG Board), performing upon the unanimous suggestion of a committee of impartial and disinterested administrators established by the GNOG Board (the Special Committee), accepted the merger settlement and the transaction, and resolved to advocate Golden Nugget Online Gaming’s stockholders vote to approve the Merger Agreement and the transaction.
The Board of Directors of DraftKings additionally accepted the transaction.
The deal is topic to approval by Golden Nugget Online Gaming stockholders, the receipt of required regulatory approvals and different customary closing circumstances and is anticipated to shut within the first quarter of 2022. And the approval of the transaction by Golden Nugget Online Gaming stockholders is anticipated to be obtained via a written consent to be offered by Tilman Fertitta.
“Our acquisition of Golden Nugget Online Gaming, a model synonymous with iGaming and leisure, will improve our skill to immediately attain a broader shopper base, together with Golden Nugget’s loyal ‘iGaming-first’ clients. This deal creates significant synergies akin to elevated mixed firm revenues pushed by further cross-sell alternatives, loyalty integrations and tech-driven product growth in addition to expertise optimization and larger advertising efficiencies. We stay up for Tilman being an energetic member of our Board and one among our largest shareholders.”
— Jason Robins, DraftKings’ CEO and Chairman of the Board
“This transaction will add nice worth to the shareholders as two market leaders merge into a number one world participant in digital sports activities, leisure and on-line gaming. Leveraging Fertitta Entertainment’s broad leisure choices and in depth buyer database, coupled with DraftKings’ mammoth community makes this an unbeatable partnership. Together, we will provide worth to our mixed buyer base that’s unparalleled. We imagine that DraftKings is without doubt one of the main gamers on this burgeoning house and couldn’t be extra excited to lock arms with Jason and the DraftKings household throughout our total portfolio of belongings, together with the Houston Rockets, the Golden Nugget casinos and Landry’s huge portfolio of eating places. This is a powerful industrial settlement for each firms.”
— Tilman Fertitta, Chairman and CEO of GNOG


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