Landcadia Holdings II-Golden Nugget Merger Vote Delayed

Landcadia Holdings II-Golden Nugget Merger Vote Delayed

The SPAC deal that would allow publicly traded Landcadia Holdings II, Inc., to go forward with an acquisition of Golden Nugget Online Gaming Inc., was put on hold when a Landcadia stockholders meeting on Friday was pushed back to Dec. 29.

Leading up to Friday’s special meeting, Landcadia Holdings II made two appeals to stockholders urging them to vote for the Golden Nugget deal, with the first on Dec. 11 and the most recent urging coming the day before the scheduled meeting.

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“The Company requests that each stockholder that holds its shares in ‘street name,’ meaning that their shares are held by a broker, bank or other nominee, should, if it has not already done so, contact their broker, bank or nominee to ensure that their shares are voted,” Landcadia Holdings II said in what amounted to an open letter. “The Company encourages stockholders to vote in advance of the Special Meeting.”

Landcadia Holdings II is a special purchase acquisition company, otherwise known as a blank check company. Such companies, albeit publicly traded, have no products or service but rather raise capital in order to absorb privately held companies. By virtue of the merger, the SPAC winds up taking the previously private company to the public markets, thus giving it the opportunity to raise capital for growth. A term for such a merger is “business combination.”

In this case, the privately held company, Golden Nugget Online Gaming, is essentially owned by a major principal of the SPAC, Tilman Fertitta. According to the LH II proxy statement to shareholders regarding the vote, “Tilman J. Fertitta, one of our sponsors and our Co-Chairman and Chief Executive Officer, indirectly owns all of the equity interests in LF LLC, GNOG HoldCo and GNOG.” Golden Nugget Online Gaming, Inc., is a wholly owned subsidiary of GNOG.

Of votes that would have actually been cast Friday, they were overwhelmingly in favor of the merger, sources said. However, a higher number of votes overall were apparently needed for approval. As a result, the brief special meeting was adjourned until Dec. 29, while an effort is made to secure more stockholder votes.

Deal Could Still Close This Year

The deal could still close by the end of the year with the Dec. 29 vote. It would make GNOG the second pure publicly traded online casino company in the nation, according to a June news release announcing the merger between Golden Nugget and Lancadia II.

According to published reports, Landcadia’s own stock could benefit significantly if the deal went through. Golden Nugget Online Gaming noted that its gross gaming revenue increased 72% in the first nine months of 2020, according to reports.

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The Landcadia Holdings II stock (LCA on the NASDAQ) has experienced trading volatility. As recently as late October, LCA was trading in the $11 range. On Dec. 7, it was in the $24 range. It closed at $21.71 on Thursday. Should the deal go through with Golden Nugget Online, the merged company is expected to trade as GNOG.

The New Jersey Casino Control Commission in late November approved Golden Nugget Atlantic City’s request to break off its Internet gaming operations from the brick-and-mortar casino and take the new company public.

DraftKings Went Public in SPAC Deal

The most noteworthy online gaming SPAC so far was when DraftKings, a sports wagering, online gaming and daily fantasy operator, was absorbed by SPAC Diamond Eagle Acquisition Co. earlier this year. The combined company moved forward under the DraftKings banner.

So far, Investor confidence in DraftKings (DKNG on the NASDAQ) has been apparent as its stock closed Thursday at more than $54 after opening in April around $20.

Another SPAC deal, between Rush Street Interactive and dMY Technology Group, could also close in late December. Stockholders also need to sign off on the $1.8 billion merger.

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