Tilman Fertitta is reportedly in discussions with Fast Acquisition Corp. (NYSE:FST) on a merger that would provide an avenue for the billionaire to bring his Golden Nugget casinos and Landry’s restaurants operations public.
Shares of Fast, a special purpose acquisition company (SPAC), spiked eight percent today on volume that was 37 times the daily average. Reactions of that magnitude are common as SPACs announce deals. But Fast isn’t confirming that it’s in talks with Fertitta. A request to Landry’s for comment wasn’t returned prior to publication of this article.
Earlier today, Bloomberg reported that Fast is in negotiations to raise another $1 billion. That would potentially finance a deal with Fertitta that would value the Golden Nugget and Landry’s businesses at $7 billion, including debt. If an agreement is reached, Fertitta would control the new company. The blank-check firm debuted last August, raising $200 million in its initial public offering (IPO), indicating another capital raise is necessary to execute a transaction in the $7 billion neighborhood.
Fit Makes Some Sense
Landry’s was a public enterprise from 1993 through 2010, when Fertitta took it private in a $1.4 billion leveraged buyout. The Houston-based company owns more than 600 restaurants across the Bubba Gump’s, Chart House, Del Frisco’s, Mastro’s and Morton’s brands, among others.
The dining side of the equation makes sense for Fast and Landry’s, because the SPAC’s co-CEOs — Sandy Beall and Doug Jacob — have deep ties to the restaurant industry. Beall was previously CEO of Ruby Tuesday, while Jacob was an investor in &pizza. Chairman Kevin Reddy was previously chief executive of Noodles & Co.
When Fast went public last year, the plan was to acquire a privately held fast or fast-casual restaurant chain. Casino gaming wasn’t part of the initial plan, and that’s likely one reason why Fertitta will control the company if an agreement is reached. Five Golden Nugget casinos — two in Southern Nevada and one in each in Louisiana, Mississippi, and New Jersey — are part of the Landry’s stable.
Fertitta is rumored to be interested in other gaming assets, particularly on the Las Vegas Strip. The pair of Golden Nugget properties in Nevada are in Downtown Sin City and Laughlin.
The Houston Rockets owner has plenty of familiarity with SPACs. His Landcadia Holdings II recently served as the springboard for Golden Nugget Online Gaming (NASDAQ:GNOG) to go public. In 2018, another Fertitta-backed blank-check firm took his food delivery business, Waitr Holdings, public. That company is a rival to the likes of DoorDash and Uber Eats.
Fast May Be Best Hope
An accord with Fast may be the best option the Texas businessman has for bringing Golden Nugget to public markets, according to some sources.
Last month, reports emerged that Fertitta is looking to sell a minority stake in the gaming and restaurant business. At that time, talk centered around a traditional IPO. But with Golden Nugget carrying $4 billion in debt and the restaurant business flailing because of coronavirus shutdowns, Wall Street bankers reportedly balked at the idea. Speculation indicated that there was some interest in the casino side of the enterprise, but the opposite was true of the dining unit.
Much of Golden Nugget’s debt — $1.4 billion, to be precise — is attributable to a special dividend issued to Fertitta in 2017 to finance his $2.2 billion purchase of the NBA’s Houston Rockets.
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