Wynn Interactive to go public in $3.2bn SPAC merger

Wynn Interactive, the online offshoot of casino operator Wynn Resorts, is set to float as part of a reverse merger with SPAC Austerlitz Acquisition Corporation I in a deal that values the combined business at an estimated $3.2bn.

This represents 4.5x Wynn Interactive’s projected 2023 revenue.

Upon the closure of the deal, which will see combined company relist on the Nasdaq under the ticker symbol WBET, Wynn Interactive’s current shareholders will retain a total equity interest in the newly combined company of approximately 79%.

Austerlitz stockholders will hold around 18%, while financier and the blank cheque company’s main sponsor, Bill Foley, will own roughly the remaining 3%.

Foley, the owner of the Las Vegas Golden Knights ice hockey team, has bankrolled several gambling-focused SPACs, including Foley Trasimene Acquisition II Corp, which merged with payments giant Paysafe in a $9bn deal in March.

As a result of this latest merger, the combined group will have more than $640m in available cash to fund existing operations and support “new and existing growth initiatives” of Wynn Interactive.

It is understood the firm is planning to make a significant investment in broad-base marketing over the next two years as it looks to raise awareness of the Wynn Interactive brand and go toe-to-toe with heavyweights DraftKings, BetMGM, and FanDuel.

The investment will target areas including performance marketing, mass media awareness campaigns, and an investment in generating more partnership agreements with affiliates.

The current Wynn web app and bonusing products are also slated for investment, as well as the deepening of integration between the app and the Wynn Rewards loyalty programme.

In addition, Wynn Interactive has also revealed it is “actively” recruiting for new staff throughout the remainder of 2021 as it looks to scale up the business.

The deal, which is still subject to approval from Austerlitz stockholders and gaming regulators, is expected to close by the end of 2021.

Current Wynn Resorts executives Matt Maddox and Craig Billings will continue to serve as chairman and president and executive director respectively of the combined group, with Wynn Interactive co-founder Sadok Kohen set to continue as CPO and director.

Wynn Interactive currently has market access to 15 states covering approximately 51% of the US population and expects to increase its coverage to 77% through nine additional states.

The company operates the WynnBET, BetBull, and WynnSLOTS brands to players in both the US and the UK.

“We are confident that this transaction will unlock the tremendous potential of Wynn Interactive to further accelerate growth and enable the business to capture the massive opportunity in North America,” Wynn Interactive chairman Maddox said.

“Bill Foley is the ideal partner to ensure continued success – his track record with business combinations, extensive experience growing marquee consumer brands and partnering to maximize value in businesses like ours will be invaluable as we continue scaling,” Maddox added.

Morgan Stanley wrote in a note on the SPAC merger announcement: “Wynn’s SPAC merger increases our confidence in the business and we now value Wynn’s sports betting and iaming business at $11/share versus prior $4.

“We get to $11/share by assuming Wynn can now reach 5% market share of North American sports betting and igaming, spends 20% on promotions, and achieves 20% margins, resulting in 2025 EBITDA of $148m, valued at a 15x multiple,” the note said.