DraftKings agrees to $1.56b deal for Golden Nugget Online Gaming

DraftKings buys out GNOG

Leading DFS operator and sports betting giant DraftKings has agreed to buy Golden Nugget Online Gaming (GNOG) in an all-stock transaction valued at around US $1.56 billion.

In a joint press statement released on Monday, the two companies announced that they had reached an agreement that would see the Boston-based gambling giant acquire Golden Nugget’s online casino product in the bid to bolster its presence in the US iGaming market.

Golden Nugget Online Gaming is the interactive arm of the Golden Nugget chain of casinos, which are owned and operated by billionaire Tilman Fertitta’s Landry’s Incorporated.

The online gaming platform is the market leader in the New Jersey online casino industry with a market share of around 30%. The brand is also live in Michigan, and there are plans to launch in other regulated markets like Pennsylvania in the near future.

In his statement about the new acquisition agreement, the DraftKings CEO and Chairman, Jason Robins, said: “Our acquisition of Golden Nugget Online Gaming, a brand synonymous with iGaming and entertainment, will enhance our ability to instantly reach a broader consumer base, including Golden Nugget’s loyal ‘iGaming-first’ customers.”

GNOG boasts a loyal customer base of over five million online casino players.

Another major merger in US gambling

The DraftKings-GNOG deal continues a recent trend of mergers and acquisitions in the US as gaming giants form strategic partnerships to help them navigate the rapidly growing markets for legal online casinos and sports betting sites.

Under the terms of the agreement, DraftKings will form a new holding company, New DraftKings, which will be responsible for buying and controlling the shares of the two subsidiaries. Investors with stocks in GNOG will receive a fixed ratio of 0.365 shares in the new parent company, although the acquisition and transaction details are yet to be approved by the shareholders.

It has also been revealed that Tilman Fertitta will continue to hold his New DraftKings shares for a period of at least one year from the closing date of the deal. The billionaire, who owns about 46% of the shares in Golden Nugget Online Gaming, is also set to join the board of the new holding company.

Fertitta has commented on this development, saying that he is thrilled about joining the DraftKings family, which he says is a market leader in the US sports betting scene.

“Together we can offer value to our combined customer base that is unparalleled,” he said.

“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.”

The two companies hope to wrap up the transaction in the first quarter of 2022.

Strategic benefits of GNOG buyout

In the joint press statement issued by DraftKings and GNOG, the two brands outlined several strategic benefits of the merger agreement.

To start with, the deal will allow DraftKings to deploy a multi-brand strategy in order to enhance cross-selling to boost the company’s market share and revenue.

The companies are also looking to create multiple cost-savings channels, with the synergies gained from the merger estimated to reach $300m at maturity. This will be achieved by migrating GNOG’s technology to DraftKings’ proprietary platform to eliminate third party costs, reducing the amount spent on advertising through marketing efficiencies, and slashing the general and administrative costs of the two companies.

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