US online gambling company Golden Nugget Online Gaming (GNOG) completed on Tuesday a previously announced…
Posted on: August 11, 2021, 01:47h.
Final up to date on: August 11, 2021, 02:40h.
Todd Shriber Learn Extra
On Monday, DraftKings (NASDAQ:DKNG) introduced the acquisition of on-line on line casino operator Golden Nugget On-line Gaming (NASDAQ:GNOG) for $1.56 billion in fairness.
DraftKings CEO Jason Robins in a 2019 Bloomberg interview. He says firm is getting a “steal” with Golden Nugget On-line. (Picture: Bloomberg)
It’s DraftKings’ largest buy since turning into a freestanding public firm in April 2020. It’s being considered as additional affirmation of the chance set within the web on line casino business. Already largely bullish on DraftKings, analysts are viewing the deal for Tilman Fertitta’s Golden Nugget On-line in a positive mild.
B. Riley analyst David Bain, who doesn’t cowl DraftKings, however does fee GNOG, says the transaction fills holes for the suitor.
First, it provides DKNG a extra vital iGaming stake and cheaper ahead market entry by the popular Golden Nugget deal the place it’s dwell with a on line casino,” mentioned Bain. “Additional, now we have argued iGaming is structurally extra worthwhile than on-line sports activities wagering.”
Whereas DraftKings is already a longtime participant within the on-line on line casino house, the business isn’t simple to interrupt into, as Bain notes, and it’s cost-intensive to organically garner prospects, underscoring why mergers and acquisitions within the house are anticipated to warmth up.
“The transaction ought to fast-forward a wanted iGaming participant base for DKNG the place GNOG is dwell — DKNG’s present participant base of youthful males differs materially from iGaming’s extra comparable older/feminine offline slot demographic,” provides the B. Riley analyst.
Probably Large Enhance to DraftKings Inventory
DraftKings shares has been largely regular this week, ticking modestly increased within the wake of the deal announcement. GNOG shares soared on Monday, reflecting the 53 p.c premium the client is paying for the iGaming firm.
Over time, the acquisition might pay vital dividends for DraftKings, notably if the $300 million in anticipated value efficiencies being touted are realized or exceeded. Moreover, GNOG brings a database of 5.5 million rewards membership members to the desk, offering the client with a strong avenue with which to cross-sell sports activities wagering and every day fantasy sports activities (DFS).
Macquarie analyst Chad Beynon says that at maturity, assuming the $300 million in financial savings is realized, the GNOG purchase might be price $5 to $7 on DraftKings’ inventory worth.
“We estimate each $10 million in incremental synergies equates to further accretion of 40 cents a share,” mentioned the analyst. “That mentioned, that is nonetheless a serious iGaming acquisition in an more and more aggressive house at a time when DraftKings was presently yielding excessive teenagers iGaming share and expressed confidence that this was steady.
In all probability Good Deal for DraftKings
DraftKings CEO Jason Robins advised members of the press Monday that the GNOG buy is a “steal” for his firm, and that may not be hyperbole.
The sportsbook operator is paying for much less of a premium for GNOG than is seen on one other current deal within the house. By Bain’s estimation, GNOG might have finally managed 10 p.c of web on line casino market and been price $27 a share. DraftKings is paying barely greater than $18.
Macquarie’s Beynon says DraftKings has ample motivations for the deal, and the transaction “is a serious optimistic” for different iGaming operators.
Associated Information Articles