Fertitta Entertainment, the parent company of Golden Nugget operator Landry’s, is to list its shares on the New York Stock Exchange through a merger with special purpose acquisition company (SPAC) Fast Acquisition Corporation.
The deal will see Fertitta Entertainment owner Tilman Fertitta sell a minority stake in the business to investors.
He will retain a 60% stake, holding stock valued in excess of $2bn following the closure of the transaction, and will remain its chairman, president and chief executive.
The business previously traded on the NYSE between 1993 and 2010, when Fertitta acquired all outstanding shares to take it private.
The Fast Acquisition combination will also see the newly-listed business retain voting control and ownership of approximately 31m shares in Golden Nugget Online Gaming.
That division, comprising the operator’s its sports betting and igaming assets, was spun off and listed on the Nasdaq in a separate SPAC combination completed on December 30, 2020.
“I look forward to returning my company to the public marketplace,” Fertitta commented. “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.”
He revealed the business had begun to explore a listing in 2019, amid “tremendous” M&A deals in the industry, though plans were delayed by the novel coronavirus (Covid-19) pandemic.
“Fast provided us with the perfect merger vehicle to allow us to take control of an already existing public company,” he explained. “Fast’s capital along with the equity investment from institutional shareholders will strengthen our balance sheet and allow us to pursue our acquisition strategy.”
He said that the merger would allow Landry’s to access capital markets with “more certainty and speed” than a traditional initial public offering.
Fast Acquisition, its SPAC partner, was formed by Doug Jacob and Sandy Beall, two executives in the restaurant industry. Jacob was a co-founder of fast food chain &pizza, while Beall founded and led casual dining restaurant group Ruby Tuesday.
“The hospitality industry is experiencing the greatest disruption of our lifetimes and Tilman and his team have remained the premiere gaming and restaurant operators in the country,” Jacob said. “We believe this diverse portfolio made up of full-service dining and entertainment concepts combined with pent-up consumer demand, will find continued success as a public company.”
Sandy Beall added: “We are excited and honored to participate with Tilman and help to sponsor his company’s return to being a public company.”
Fast’s chief brand officer, entrepreneur and restaurateur Eugene Remm, will serve on the board of the combined entity. He already works with Fertitta, as a partner in restaurant business Catch Hospitality Group.
The transaction implies a $6.6bn enterprise valuation for the Golden Nugget/Landry’s business. This represents a 9.25 multiple on its projected earnings of $648m in its 2022 fiscal year.
Gross proceeds from the combination will consist of the $200m cash in trust held by Fast Acquisition following its IPO in August last year. Institutional shareholders have committed to investing a further $1.2bn through a private investment in public equity (PIPE) transaction.
The proceeds will be used to accelerate the business’s growth plans, as well as to cover general corporate purposes and to reduce existing debt.
In connection with the merger, a series of reorganizational transactions will be carried out. This is to separate certain businesses and assets that Fertitta will continue to wholly own, from the assets that are to make up the public company.
Upon closing, which is expected to take place in the second quarter of 2021, Fertitta will own 60% of the business, with the Fast Acquisition sponsors to hold a 1% stake. The PIPE participants will have a 35% holding, and remaining public stockholders the final 4%.
The transaction has already been approved by the boards of both the SPAC and Fertitta Entertainment. It is still subject to approval from Fast stockholders and customary closing conditions, however.