Sports betting giant DraftKings has been cleared to become a public company following approval of a merger with SBTech and Diamond Eagle Acquisition, the public acquisition vehicle headed by industry veterans Harry Sloan and Jeff Sagansky.
Diamond Eagle Acquisition Corp., led by Sloan, announced Wednesday that it had received the approval from the Securities and Exchange Commission and is now moving to the final step in the process. An April 23 meeting has been scheduled for DEAC shareholders to vote on the business combination with DraftKings and SBTech.
The deal is valued at $2.7 billion. Diamond Eagle will combine with DraftKings and SBTech to create what’s described as the only vertically integrated U.S. sports betting and online gaming company. Upon conclusion of the deal, the new DraftKings will become a publicly traded company under the new symbol of “DKNG” and become incorporated in Nevada. The new company will have more than $500 million of unrestricted cash to ensure access to capital to fuel growth.
Boston-based DraftKings offers mobile and online sports betting in Indiana, New Jersey, Pennsylvania and West Virginia, and sports betting at retail locations in Iowa, Mississippi, New Jersey and New York. The DraftKings deal was orchestrated by Sloan, who has launched six public acquisition vehicles with Sagansky since 2011. Diamond Eagle bowed in May with a $400 million public offering.
DraftKings is one of the prominent online wagering brands to emerge from the rise of fantasy sports leagues. The company will continue to be headed by CEO Jason Robins, a co-founder of DraftKings along with Paul Liberman and Matt Kalish, who will also stay on as senior managers.
Sloan and Sagansky launched Flying Eagle Acquisition Corp. in March with a $600 million initial public offering. These kind of acquisition companies have gained in popularity in recent years as a means for investors to participate in new players in the media and digital sector — particularly with rivals emerging to Netflix in streaming technology.
Sloan served as chairman and CEO of MGM between 2005 and 2009 prior to the completion of its restructuring via a pre-packaged bankruptcy. He was also the founder, chairman and CEO of SBS Broadcasting, Europe’s second-largest broadcaster. Sagansky worked for three decades in show business, including serving as president of CBS Entertainment between 1990 and 1994, and as CEO of Paxson Communications from 1998 to 2003.