Landcadia Investors Will Vote on GNOG Merger This Month

Austen


Posted on: December 2, 2020, 07:06h. 

Last updated on: December 3, 2020, 02:16h.

It’s been a long road. But investors in Landcadia Holdings II, Inc. (NASDAQ:LCA), a special purpose acquisition company (SPAC) co-owned by Tilman Fertitta and investment bank Jefferies, will finally get a chance to vote on a proposed merger with Fertitta’s Golden Nugget Online Gaming (GNOG). The vote is anticipated during a virtual meeting scheduled for Dec. 18.

Landcadia vote
Houston Rockets owner Tilman Fertitta, seen here at a game in 2019. His Landcadia SPAC will vote on merging with GNOG on Dec. 18. (Image: Troy Taormina/USA TODAY Sports)

The blank-check firm revealed the date in a Schedule 14A filing with the Securities and Exchange Commission (SEC) today after the close of US markets. The news sparked a massive rally in the SPAC’s shares during Wednesday after-hours trading session. After slumping 6.66 percent during normal trading hours, Landcadia surged 13.71 percent in after-hours trades.

The SEC filing emerges a week after the New Jersey Casino Control Commission (CCC) signed off on a gaming license for GNOG. That eliminated one of the last procedural hurdles on the road to the iGaming company becoming a publicly traded entity.

A confirmed date for the Landcadia shareholders’ vote comes about six months after the SPAC unveiled plans to merge with GNOG. That deal values the combined company at an anticipated pro forma enterprise value of approximately $745 million.

Don’t Expect Surprises

Investor votes usually don’t contain surprises, and that will likely be the case with the Dec. 18 Landcadia meeting. In this case, it behooves investors to permit the blank-check company to proceed with the GNOG transaction, because that could facilitate appreciation in the SPAC’s shares.

An interesting element to the deal is that, in a page out of the DraftKings playbook, Golden Nugget Online will have a dual share class structure. The Class A stock will be what becomes widely available to the investing public. But the Class B equity will be reserved for Fertitta and a small number of early investors.

That plan was revealed in June. But at that time, it wasn’t clear what the voting rights associated with the “B” shares would be. The SEC filing indicates that stock will come with 10 votes per share compared to one vote for each unit of the common stock.

Mr. Fertitta is expected to beneficially own approximately 11.1 percent of the economic interests of New GNOG and 79.9 percent of the voting power of the capital stock of New GNOG,” according to the filing.

He owns 31,350,625 Class B shares, which can be converted into Class A equity, thus giving him 53 percent beneficial ownership of the iGaming company and will maintain super majority voting control as long as he keeps at least a 20 percent interest in the firm. Fertitta, who also owns the NBA’s Houston Rockets, among other holdings, will become GNOG’s chief executive officer.

Busy Time for Tilman

Confirmation that Landcadia investors will vote on the GNOG merger comes a day after reports surfaced that Fertitta is mulling an initial public offering (IPO) of his Golden Nugget gaming and Landry’s restaurant businesses.

Those discussions are in the early innings, and it’s not immediately clear if Fertitta goes the blank-check route with that deal. But he recently formed another SPAC, Landcadia III.

As for Golden Nugget Online, not only is the internet casino firm profitable — a rarity among young growth companies — it holds dominant positioning in New Jersey, the largest iGaming market in the US. The stock will trade on the Nasdaq under the ticker “GNOG.”

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