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It’s official: Golden Nugget Online Gaming (GNOG) is now a publicly traded corporation. It achieved that feat without an initial public offering, by merging with Landcadia Holdings II, a special purpose acquisitions company (SPAC).
SPACs have been all the rage on Wall Street of late, especially within the gambling industry. Colloquially known as “blank check companies,” they exist simply as a way for investors to purchase a private company and take it public.
Previously, Rush Street Interactive and DraftKings have taken this route to getting themselves onto the stock market. At the same time, other SPACs are still prowling around, looking for likely candidates to gobble up in iGaming and adjacent industries.
The GNOG deal received final shareholder approval this week. It combines the SPAC trend with another popular move in the US market these days, which is splitting off online operations from the rest of the company.
Despite sharing a brand, and operating in partnership with the parent company in New Jersey, Golden Nugget Online Casino will now be a more independent entity than ever before. That’s useful, as it’s about to begin its expansion into new states where the brand does not have a retail presence.
Leadership for the company is unchanged. CEO Tilman J. Fertitta was terse in discussing the completion of the deal:
“I am pleased to see the business combination finally close,” he said in a press release. “We see tremendous opportunity in the online gaming space and are excited to be a part of it.”
Today, December 30, the companies executed the final step of the deal. Landcadia, having completed the purchase, officially changed its own name to “Golden Nugget Online Gaming” and its stock symbol to GNOG. Any distinction between the two is, at this point, just a legal technicality.
Landcadia’s stock had been trading somewhere south of $15 up until mid-November. As the deal approached finalization, its value rose, crossing the $25 mark before trading paused for a few days over Christmas. When trading resumed on December 28, it opened at $27.08, presumably fueled by excitement over the impending deal.
That valuation may have been a bit excessive, however. On its first day as GNOG, the stock has dropped around 11.5%, despite an uptick early in the day. This is quite a stark contrast to DraftKings, which has been on a tear since going public.
The difference may have to do with the fact that Golden Nugget hasn’t yet proven the value of its brand outside its home state. We should see its casino product launch in both Michigan and Pennsylvania soon in the New Year. Investors may be reserving their enthusiasm until they see whether that expansion goes as planned.