Shareholders of Diamond Eagle Acquisition Corp. have approved the acquisitions of DraftKings and SBTech and the public listing of the new entity.
At a shareholders’ meeting yesterday (23 April), investors holding 99.7% of Diamond Eagle shares voted in favor of the combination, with less than 0.04% voting against and the remaining shareholders abstaining.
Through the merger, Diamond Eagle will acquire DraftKings for $2.10bn and SBTech for €590m ($634.1m). The new business will then be renamed DraftKings Inc and continue to be listed on the Nasdaq exchange.
The business also voted in favor of moving the state of its incorporation from Delaware to Nevada, with holders of 86.6% of shares backing the move.
Shareholders also approved the new arrangements of shares for the combined business. The new DraftKings Inc. will have 2.10bn shares of stock. This will consist of 900m Class A shares, worth one vote, 900m class B shares, worth 10 votes, and 300m preferred shares. Each will be valued at $0.0001 per share.
When the companies merge, Jason Robins, chief executive of the old DraftKings, will assume the same role. Robins will be issued with all of the Class B shares, which ensures he has 90% of voting power over the business. This may be diluted through future equity issuances.
SBTech chief executive Richard Carter will become an advisor to the business awhile Andrew Cochrane , currently SBTech’s chief development officer, will become senior vice persistent for commercial development. SBTech chief financial officer Shay Berka will become chief international officer of DraftKings.
Shareholders of 33,484,695 DEAC shares, representing 67.0% of the issued capital, were present.
The merger was approved in December, and will see DraftKings split from its previous technology supplier Kambi, whose shares fell more than 30% on the day of the merger.
In January, Diamond Eagle revealed that DraftKings made a loss of $114.1m in the first nine months of 2019, and in March it revealed this loss widened to $147m for the full year.
However, despite an earnings before tax, interest, depreciation and amortisation (EBITDA) loss of $99m in 2019, the business said it was confident of EBITDA exceeding $1bn in the long term.
The operator said this projection is based on 65% the US population living in jurisdictions with legal online sports betting, of which DraftKings has a 25% market share for $2.4bn in revenue, and 30% living in areas with legal igaming, of which DraftKings expects a 15% market share and $700m in revenue.
DraftKings expects these figures to be realised after five years of maturity at these levels of legality.
In addition, the operator expects $300m in daily fantasy sports revenue and $400m in revenue from SBTech at this point.
Earlier this month (9 April), SBTech was ordered to set aside $30m in cash and stock to settle any claims relating to a cybersecurity incident which forced the supplier to power down all its datacenters around the world and saw all SBTech clients go offline from Friday March 27.