Golden Nugget parent company embroiled in potential SPAC deal row

Golden Nugget Online Gaming parent company Fertitta Entertainment (FEI) is facing a major legal headache regarding a proposed blank-check merger with a SPAC business. The SPAC involved, FAST Acquisition, initially agreed to merge with FEI in February, in a deal that was worth an estimated $6.6bn, and something which would potentially allow FEI to become a publicly traded company. In July, the value of the deal rose to $8.6bn following the inclusion of several parts of FEI’s Landry restaurant business. FAST also reached an agreement to purchase Catch restaurant, including Catch Steak, which is already 50% indirectly owned by FEI. Despite both parties clearly making moves to complete, the deal did not conclude by the proposed termination date for talks of December 1, prompting FEI to send written notice of its intention to end the SPAC merger proceedings. Firing back, FAST suggested the failure of completion was “unquestionably” down to FEI, suggesting the firm was still bound to its SPAC merger proposal. The blank-check SPAC firm highlighted the late delivery of financial documentation by FEI required to move the merger forward, documents which were initially supposed to be delivered in March but were only received by the firm in July. “The company further stated that it intends to take all necessary steps to protect itself and its investors,” FAST said in an SEC filing connected with the case. In a strongly worded rebuttal notice referencing FEI, FAST suggested the notice to terminate was “invalid, unenforceable, of no legal force and effect and is hereby rejected”. “We hereby demand that Florida [FEI] withdraw the purported notice immediately and take all necessary steps to consummate the transactions contemplated by the merger agreement forthwith,” FAST wrote. “The purported notice and any further failure to comply with Florida’s ongoing obligations under the merger agreement constitute a material breach. The notice demands FEI consummate the transaction as soon as possible, ordering it and all subsidiaries to take all actions “as may be reasonably necessary” under the agreement. “Florida’s material breach has and will cause irreparable injury, and we intend to take all necessary steps to protect the SPAC and its investors,” the notice continues. “You are hereby placed on notice of breach and that should your breach not be immediately remedied, we intend to initiate litigation,” it adds. The breakdown of the SPAC merger is understood to not directly affect the proposed acquisition of Golden Nugget Online Gaming by DraftKings, which was first unveiled in August. However, the commercial agreement between DraftKings and FEI could come under scrutiny as part of any potential litigation proceedings, should they occur. DraftKings’ commercial agreement with FEI includes marketing integrations, sponsorship assets with the Houston Rockets, an expanded retail sportsbook presence, and the optionality to obtain market access on favourable terms through certain Golden Nugget casinos. Under the terms of the deal, DraftKings will also become the exclusive daily fantasy sports, sports betting, and igaming partner of the Houston Rockets, with plans to open a sportsbook at the Toyota Center, pending state legalisation and regulatory approvals. The proposed SPAC merger termination is the second major termination to hit a US casino and entertainment operator, following Wynn Resorts’ decision to end a proposed SPAC merger involving its Wynn Interactive business and Austerlitz Acquisition Corporation in November.