DraftKings has entered into a definitive business combination agreement with Nasdaq-listed special purpose acquisition company Diamond Eagle Acquisition Corp and SBTech to create what it describes as the only vertically-integrated pure-play sports betting and online gaming company based in the United States.
The transaction is expected to close in the first half of 2020 and will see Diamond Eagle change its name to DraftKings Inc. as a Nevada incorporated company, with its Nasdaq listing changing to a new ticker symbol.
“The combination of DraftKings’ leading and trusted brand, deep focus on customer experience and data science expertise and SBTech’s highly innovative and proven technology platform creates a vertically-integrated powerhouse,” said Jason Robins, co-founder and CEO of DraftKings.
“I look forward to building significantly upon our goals of continuing our state-by-state rollout and creating the most entertaining and engaging customer experiences for sports fans globally.”
The new DraftKings will continue to be led by Robins and his highly experienced management team, including co-founders Paul Liberman and Matt Kalish, with the SBTech management team set to be integrated into the organization.
“The combination of DraftKings and SBTech brings together two tech-native companies with the customer at their cores,” said Gavin Isaacs, chair of SBTech.
“SBTech will maintain its core business and continue its B2B focus. We are excited about the opportunity to join a company with a similar innovation DNA and create a unique and differentiated player in global sports betting and online gaming.”
Harry E. Sloan, founding investor of Diamond Eagle, added: “We are pleased to bring DraftKings and SBTech together as one public company.
“DraftKings is already a premier online fantasy sports and betting platform. With the full integration of SBTech’s technology and innovative product expertise coupled with the right capitalization, DraftKings will be in a great position to continue its ambitious expansion plans in the United States.”
Institutional investors, including funds managed by Capital Research and Management, Wellington Management and Franklin Templeton, have committed to a private investment of $304m in Class A common shares of the combined company, and the placement will close concurrently with the business combination.
Subject to any redemptions by Diamond Eagle stockholders, there is $400m currently held in Diamond Eagle’s trust account, and it is anticipated that the combined company will have an equity market capitalization at closing of approximately $3.3bn, with more than $500m in unrestricted cash on the balance sheet.
DraftKings currently offers mobile and online sports betting in Indiana, New Jersey, Pennsylvania and West Virginia, and retail sports betting in Iowa, Mississippi, New Jersey and New York, alongside daily fantasy sports contests in 43 US states and eight international markets.
SBTech currently serves more than 50 partners in over 20 regulated markets with its omni-channel sports betting solutions, trading services, and marketing and bonus tools.