Golden Nugget (GNOG) stock rises. Time to buy?

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Golden Nugget (GNOG) stock rises. Time to buy?

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 Golden Nugget (GNOG) stock rises. Time to buy?
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Summary

  • Golden Nugget Online Gaming stocks climbed by 47 per at market open on Monday, August 9
  • The surge came following the announcement that DraftKings Inc. has agreed to buy Golden Nugget in an all-stock deal.
  • The deal is likely to close in Q1 2022.

Stocks of US-based firm Golden Nugget Online Gaming Inc. (NASDAQ:GNOG, US:GNOG) climbed by 47 per cent to US$ 18.16 at market open (10AM EST) on Monday, August 9.

The surge came following the announcement that leading gaming and entertainment company DraftKings Inc. (NASDAQ:DKNG, DKNG:US) has agreed to buy Golden Nugget.

The deal, as per reports, is set to be valued at US$ 1.56 billion.

With a market cap of around US$ 20.7 billion, DraftKings is looking to expand its presence in the online betting industry. After the deal is completed, the new entity is expected to use the combined resources and assets to boost sales and increase market share. 

The Board of Directors of both the companies have approved the transaction and this deal will likely close in the first quarter of 2022.

Apart from expanding market share, DraftKings is set get additional casino-type betting games that could help the company achieve its latest revenue forecast for 2021.

On Monday morning at opening bell, DKNG shares jumped by about one per cent to US$ 52.06.

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Key highlights of the DraftKings (DKNG)-Golden Nuggets (GNOG) deal

Golden Nugget is backed by billionaire businessperson Tilman Fertitta, who had opted for a public debut via a special purpose acquisition company (SPAC) merger.

DraftKings is expected to record synergies of US$ 300 million at maturity and eliminate additional platform expenses by transferring Golden Nugget's current technology to the company's in-house proprietary platform.

Golden Nuggets' iGaming customer base is huge and DraftKings could use it to increase the revenues and expand the customer base.

Under the deal, both firms will undergo a reorganization and will be named as New DraftKings. Once the acquisition is through, it will be rebranded DraftKings Inc.

As part of the all-stock transaction, shareholders of Golden Nugget will receive 0.365 shares of New DraftKings' common stock on a fixed ratio basis. As Fertitta holds a 46 per cent stake in Golden Nuggets, he will continue to hold shares of DraftKings that will be issued to him after the merger for at least one year.

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