Tilman Fertitta’s Golden Nugget/Landry’s Goes Public via SPAC

Fertitta Entertainment, the parent company of Golden Nugget/Landry’s casino and restaurant businesses, is going back to the public via a merger with a special purpose acquisition company (SPAC), Fast Acquisition.

SPAC Route More Effective

The $6.6 billion merger deal with the SPAC will allow the sole owner of Fertitta Entertainment, Tilman Fertitta, to retain 60% of the combined entity, as well as his position as chairman, president and chief executive officer for the business consisting of 5 casinos and 600 restaurants including Landry’s Seafood, McCormick & Schmick’s, Del Frisco’s, Morton’s Steakhouse and Bubba Gump Shrimp Co.

In December, there was a Bloomberg report speculating on information from unnamed sources that Fertitta was mulling on the option to raise billions through the public markets, implying the Texas billionaire would achieve that through an initial public offering (IPO).

“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…At the end of the day, the decision to do a deal with FAST was a no-brainer.”

Tilman Fertitta, Chairman, President and CEO, Fertitta Entertainment

Upon closing the transaction planned for the second quarter of 2021, stockholders of Fast Acquisition will have 1% of the combined company while private investment in public equity (PIPE) investors will hold a 35% stake. The remaining 4% of the combined business will be owned by public stockholders.

Houston Rockets Exempt from the Deal

One other piece of the business owned by Fertitta, the franchise from the National Basketball Association (NBA) Houston Rockets, which the casino mogul bought in 2017 for $2.2 billion will remain outside of the merger deal. The deal does not include all of Landry’s restaurants either, Fertitta noted, declining to provide further details.

The merger which still needs approval from the shareholders at the SPAC, will generate gross proceeds to the amount of $1.2 billion from the PIPE investment just before the closing of the transaction plus $200 million held in trust by Fast Acquisition.

The deal seeks to provide funds for Fertitta to engage in mergers and acquisitions (M&A), but the Golden Nugget/Landry’s business currently has $4 billion of debt and some of the proceeds from the transaction will do towards reducing that amount, leaving the billionaire with less to target new businesses.

The announcement of the deal confirmed the trend of SPAC transactions dominating the IPO market. In January, blank-check companies generated transactions to the amount of $26 billion, while from SPAC deals completed last year, 90 new companies already started trading in 2021.