Fertitta Entertainment, the parent company of the Golden Nugget casinos and Landry’s, announced Monday that it plans to merge with FAST Acquisition Corp. and go public.
The deal will value the company at $6.6 billion. Institutional shareholders have committed to a $1.2 billion PIPE investment (Private Investment in Public Equity); cash proceeds are expected to consist of FAST’s $200 million cash in trust. Fertitta Entertainment will use the proceeds from the transaction for general corporate purposes, to accelerate growth initiatives, and repay existing debt.
“FAST provided us with the perfect merger vehicle to allow us to take control of an already existing public company,” Tilman Fertitta said in a statement. “FAST’s capital along with the equity investment from institutional shareholders will strengthen our balance sheet and allow us to pursue our acquisition strategy.”
Fertitta, also owner of the Houston Rockets, will continue to serve as chairman, president, and CEO. He’ll also be the brand’s largest stockholder, with roughly 60 percent ownership valued at more than $2 billion. The Golden Nugget and Landry’s management team will remain in place, as well. FAST sponsors are expected to own 1 percent, PIPE participants will hold 35 percent, and the remaining public stockholders will own 4 percent.
The transaction was unanimously approved by the board of directors of FAST and Fertitta Entertainment. The merger is still contingent on the approval of FAST stockholders and other regulatory and gaming approvals. The deal is expected to close in Q2.
Fertitta Entertainment is set to return to the stock market 11 years after Fertitta took the company private. In the brand’s 35-year history, it has executed more than 25 acquisitions, including six public companies valued at more than $3 billion. As a private company, it grew unit level EBITDA from $208 million in 2010 to $741 million in 2019.
The brand started to explore going public in 2019, but the COVID pandemic set those efforts back. FAST, a special acquisition company, reignited those plans. A special acquisition company, or blank check company, is an entity formed strictly to merge with an existing brand and take it public.
“After I compared the opportunities provided by a transaction with FAST, versus the traditional IPO route, it became abundantly clear that we could access the capital markets with more certainty and speed if we did a deal with FAST,” Fertitta said. “Working with Doug [Jacob] and Sandy [Beall] has been a pleasure, and I truly appreciate their time and contribution to this process. At the end of the day, the decision to do a deal with FAST was a no-brainer.”
The merger is a sign of good news for Landry’s, which was forced to temporarily lay off 40,000 workers in March 2020 due to the COVID pandemic. A month later, Fertitta was looking to raise more debt by offering potential lenders an interest rate of 15 percent to participate in a $250 million loan.
Golden Nugget/Landry’s is a hospitality, gaming, entertainment, and restaurant brand that operates more than 500 outlets, including more than 400 high-end and casual-dining locations globally. Some examples include Del Frisco’s, Landry’s Seafood House, Morton’s The Steakhouse, Joe’s Crab Shack, Chart House, Rainforest Cafe, McCormick & Schmick’s Seafood, and Oceanaire Seafood Room. The restaurants boast an AUV of $5.7 million and average EBITDA of $1 million.
FAST, formed in August, is led by co-CEOs Sandy Beall, the founder of Ruby Tuesday, and Doug Jacob, who helped launch &pizza. The chairman is Kevin Reddy, once CEO of Noodles & Company and COO of Chipotle. Other members include Kat Cole, the former COO of Focus Brands, and NFL All-Pros Todd Gurley and Ndamukong Suh.
”The hospitality industry is experiencing the greatest disruption of our lifetimes and Tilman and his team have remained the premiere gaming and restaurant operators in the country,” said Jacob said in a statement. “We believe this diverse portfolio made up of full-service dining and entertainment concepts combined with pent-up consumer demand, will find continued success as a public company.”
The merger will also include voting control and ownership of roughly 31 million shares—or nearly half—in the publicly traded Golden Nugget Online Gaming.