Why Golden Nugget Online Gaming Stock Soared Today

What happened 

Shares of Golden Nugget Online Gaming (NASDAQ:GNOG) surged more than 50% on Monday after the company said it agreed to be acquired by digital sports entertainment giant DraftKings (NASDAQ:DKNG)

So what

The all-stock deal values Golden Nugget at about $1.56 billion. Investors would receive 0.365 shares of DraftKings stock for each share of Golden Nugget they own. The transaction is expected to close in the first quarter of 2022, subject to regulatory and shareholder approval.

An online casino game is displayed on a mobile phone.

Draftkings wants to bolster its betting operations by purchasing Golden Nugget Online Gaming. Image source: Getty Images.

The merger would allow DraftKings to benefit from Golden Nugget’s popular brand and 5-million-strong customer database, thereby boosting its market share and gaming revenue. Management also projects up to $300 million in annual synergies, driven by reduced technology and marketing costs.

As part of the deal, DraftKings reached an agreement with Fertitta Entertainment — the parent company of Golden Nugget Hotel & Casinos and the NBA’s Houston Rockets — to become the exclusive daily fantasy sports and sports betting partner of the Rockets.

Now what 

Notably, Tilman Fertitta, who owns roughly 46% of Golden Nugget’s stock, agreed to hold the DraftKings shares he obtains from the merger for at least one year after the closing.

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“There’s a reason I wanted it to be an all-stock deal,” Fertitta said during an interview with Bloomberg TV. “This is going to be a huge part of the American economy, online sports betting and gaming, in the years to come.”

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/08/09/why-golden-nugget-online-gaming-stock-soared-today/

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