Daily fantasy sports and sports betting operator DraftKings on Thursday completed its $3.3 billion merger with Diamond Eagle Acquisition Corp. (DEAC) and sports betting technology provider SBTech to form the “only vertically integrated pure-play sports betting and online gaming company based in the United States.”
The deal was approved by DEAC shareholders at a Thursday meeting. The combination will see DraftKings begin trading on the NASDAQ Global Select Market today, April 24, under the ticker symbol DKNG.
The DFS and wagering operator can now go public thanks to its tie-up with DEAC, which is a special purpose acquisition company that went public last May.
Commenting on the recently closed merger, DraftKings co-founder and CEO Jason Robins said that this marks another milestone for the company “and the future of digital sports entertainment and gaming in America.”
Mr. Robins went on to say that “by bringing together our leading consumer brand, data science expertise and industry-leading products with SBTech’s proven technology platform, we will accelerate our innovation, growth and scale.”
Mr. Robins will lead the combined company as its Chief Executive Officer. DraftKings will maintain its Boston headquarters as well as US offices in Hoboken, Las Vegas, San Francisco, and New York and international offices in Dublin, Kyiv, Sofia, Plovdiv, and Tel Aviv.
Merger Through Acquisition of SPAC
Mr. Robins said that their choice to go public through the acquisition of a SPAC had its advantages over a traditional IPO, particularly in the face of a global pandemic.
In an interview with Yahoo Finance, the DraftKings CEO said that even before the current situation, they had discussed “how the market had been in an 11-year bull run, and it was quite possible with the election approaching that bad news or something could cause a real downturn.”
Mr. Robins pointed that in the event of such a downturn, a traditional IPO would not have protected them the way the SPAC structure does.
DEAC raised $400 million from its IPO in May 2019. DraftKings is now set to add that money to its balance sheet. In addition, it should be noted that the combined DraftKings-SBTech group has around $500 million in cash on hand at a time where every business needs a capital infusion.
Mr. Robins noted that if they had taken the traditional IPO route, they might not have been able to close their combination with the gambling technology provider.
However, DraftKings has finalized the transaction and can now put another $500 million on its balance sheet at a time that raising money is a very challenging task.
Commenting on the current lack of sports due to the global Covid-19 pandemic, Mr. Robins said that this is a temporary situation and that if most sports return this fall, as planned, operators will have some very busy months with NFL, MLB, MLS, NHL, and golf all taking place at once.