Wynn Interactive Going Public in Deal with Foley SPAC Austerlitz Acquisition

Posted on: May 10, 2021, 03:41h. 

Last updated on: June 23, 2021, 01:44h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Wynn Resorts (NASDAQ:WYNN) said today it’s entering an agreement with special purpose acquisition company (SPAC) Austerlitz Acquisition Corp. I (NYSE:AUS) to bring the gaming operator’s interactive unit public.

Wynn Interactive
Financier Bill Foley. His Austerlitz Acquisition is merging with Wynn Interactive. (Image: Bloomberg)

In a deal with estimated post-transaction enterprise value of $3.2 billion, Wynn Interactive will merge with the blank-check company, eventually becoming a standalone entity listed on the Nasdaq Stock Exchange under “WBET.” Austerlitz is controlled by Las Vegas Golden Nights owner Bill Foley.

Wynn Interactive currently has market access to 15 states covering approximately 51 percent of the US population, and expects to gain access to additional states in the near-term, resulting in its footprint covering approximately 77 percent of the US population,” according to a statement issued by the Encore operator.

Under the terms of the deal, current shareholders of Wynn Interactive will own 79 percent of the company, including 58 percent held by Wynn Resorts. The transaction includes approximately $640 million of cash from Austerlitz.

Wynn made the announcement on the same day it delivered first-quarter results — numbers that missed Wall Street expectations. The company reported a loss of $2.53 a share on the basis of generally accepted accounting principles (GAAP), with revenue of $725.78 million. Analysts expected a loss of $2.11 on sales of $759.25 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) checked in at $58.9 million, well below the consensus estimate of $82.3 million.

Shares of Wynn are slightly higher in Monday’s after-hours session, while Austerlitz is up nearly three percent. It’s common for blank-check names to rally on deal announcements, because those entities face two-year time lines to execute mergers amid fierce competition to get transactions done.

Foley Making Good on Promise

Foley’s no stranger to the SPAC game. Last year, his Foley Trasimene Acquisition Corp. II revealed plans to merge with fintech company Paysafe Group Holdings Ltd. in a $9 billion transaction.

Late last year, Foley made clear he harbored iGaming ambitions and was looking to enter the fast-growing industry in dominant fashion. He’s right to want in on internet casinos. Though estimates vary wildly regarding how large the segment will eventually be, it’s clear it will be significantly bigger than it is today. Goldman Sachs recently said the North American online casino market is worth $1.9 billion today, but that figure will vault to $14 billion in 2033.

In the statement, Wynn CFO Craig Billings said the company is eyeing “what will ultimately be a $45 billion North American online sports betting and iGaming market.”

Wynn Interactive is currently live in six states and has been notching a series of agreements and smaller deals aimed at bolstering its online casinos and sports wagering footprints.

Gaming SPAC Activity Heating Up Again

While off the pace seen last year due in part to a cooling in broader blank-check activity, there are again signs of life in the gaming/SPAC arena.

In addition to the Wynn Interactive announcement, Betway parent Super Group said it’s merging with Sports Entertainment Acquisition Corp. (NYSE:SEAH), while Sportradar and Horizon Acquisition Corp. II (NYSE: HZON) are reportedly considering extending talks to bring that much-anticipated deal home.

As for Wynn, it’s following a template previously laid out by other casino operators that monetized iGaming units by taking those businesses public through blank-check mergers.

The Wynn Interactive transaction is slated to close by the end of this year.