DraftKings acquires SBTech in $3.3bn combination
Companies announce three-party deal that will see combined group listed on the Nasdaq stock exchange
DraftKings has acquired sportsbook platform SBTech, in a three-party deal that will also see the business go public.
The deal will see DraftKings and SBTech brought by Diamond Eagle Acquisition Corp, a special purpose acquisition company listed on the Nasdaq exchange.
No acquisition price was announced but EGR understands the deal valued SBTech at $700m (£539m).
Upon closing, expected in H1 2020, Diamond Eagle will be renamed DraftKings Inc., reincorporated in Nevada and remain Nasdaq-listed under a new ticker symbol.
The involvement of Diamond Eagle was one way for DraftKings to raise the necessary cash for the SBTech acquisition.
Speaking about the acquisition of SBTech, DraftKings CEO Jason Robins said the combination created a “vertically-integrated powerhouse”.
“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,” Robins said.
The new-look DraftKings will continue to be led by Robins and will retain DraftKings’ management team, including co-founders Paul Liberman and Matt Kalish.
The SBTech management team will also be integrated into the organisation.
The combined group will have a market cap of approximately $3.3bn (£2.5bn), the companies said.
Institutional investors have committed to a private investment of $304m in the firm, including funds managed by Capital Research and Management Company, Wellington Management Company and Franklin Templeton.
“The combination of DraftKings and SBTech brings together two tech-native companies with the customer at their cores,” said Gavin Isaacs, SBTech’s chairman.
“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.”
The deal is a blow for DraftKings’ current platform provider Kambi, whose stock dipped as much as 20% when the deal was first mooted by Legal Sports Report earlier this year.