DraftKings has struck a deal that will see it acquired by a special purpose acquisition company alongside betting and gaming technology provider SBTech, with the combined entity to be listed on the Nasdaq Stock Exchange.
Diamond Eagle Acquisition Corp will acquire the businesses to create what is described as “the only vertically integrated pure-play sports betting and online gaming company” based in the US.
The business was established by film producer Jeff Sagansky and Harry Sloan, previously chief executive of US media giant Metro-Goldwyn-Mayer to invest in new media businesses in May this year. That month it raised $400m through an initial public offering, and currently trades on the Nasdaq.
Diamond Eagle will be renamed DraftKings Inc once the transaction is closed – something expected to take place in the first half of 2020 – with the business to reincorporate in Nevada. Institutional investors, including funds managed by Capital Research and Management, Wellington Management and Franklin Templeton, have committed to acquiring $304m in Class A common stock, in addition to the $400m raised through the initial public offering.
“We are pleased to bring DraftKings and SBTech together as one public company,” Sloan said. “DraftKings is already a premier online fantasy sports and betting platform. With the full integration of SBTech’s technology and innovative product expertise coupled with the right capitalization, DraftKings will be in a great position to continue its ambitious expansion plans in the United States.
“I have known Jason Robins for four years, and consider him a true entrepreneur. I believe our investors share my utmost respect for his vision and leadership.”
It is expected that the DraftKings Inc business will have an equity market capitalization of around $3.3bn at closing, with more than $500m of unrestricted cash on its balance sheet.