SPACs Eating Their Own: DKNG to Acquire GNOG

DraftKings (DKNG) is acquiring Golden Nugget (GNOG) in a $1.56B deal. Expect SPAC market weakness to continue. The 3 SPAC plays investors are making today.
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Today DraftKings (DKNG), one of the most successful de-SPACs to date, announced it is acquiring Golden Nugget (GNOG) in an all-stock deal. The combined company is valued at $1.56B and looks set to power DKNG even higher. DKNG is up about 2.75% and is up over 46% premarket.

This should be welcome news in SPAC land as it shows de-SPACs driving hard on execution to increasingly create value for shareholders. In a sign of continued commitment to long-term success, Tilman Fertitta -- a 46% owner of GNOG -- has agreed to hold the DKNG shares for a minimum of one year post closing. 

Beyond this interesting deal, SPAC investors should expect the recent market weakness to continue through the rest of the summer despite the decent activity volumes. There is little in the market that suggests a resurgence of enthusiasm from investors -- whether retail or institutional. As of now, the three plays that most are looking at are:

  1. Yield Plays: buying baskets of cheap SPACs and capturing the yield from a $10 redemption. This play has been working well for most and is safe unless operationally an investor doesn't somehow misses the ex-redemption date.
  2. Warrants: there continues to be interest in investing directly in SPAC warrants where the can be solid upside. The risk here is that there is no backstop for losses like there is with the regular unit/equity play and the $10 redemption.
  3. De-SPACs: there is a growing sentiment that a select few de-SPACs are pushed below their fair value due to the overall downward pressure on SPACs. So, investors are on the hunt for those de-SPACs that may be overly sold and could present good value, strong upside if they can deliver operationally.

August's SPAC Deal Announcements
August's deal announcements highlight the continuing weakness with only one out of the five trading above NAV.

Aug 06 | $ 9.98 | CMLT - CM Life Sciences III Inc. --> EQRx, Inc.
Aug 05 | $ 9.86 | GCAC - Growth Capital Acquisition Corp. --> Cepton Technologies, Inc
Aug 04 | $ 9.87 | FTAA - FTAC Athena Acquisition Corp. --> Pico
Aug 02 | $ 10.08 | YSAC - Yellowstone Acquisition Co --> Sky Harbour LLC
Aug 02 | $ 9.83 | VPCB - VPC Impact Acquisition Holdings II --> Kredivo

August SPAC IPOs
IPOs continue to be weak as well with only those with overfunded trusts trading above deal price.

Aug 05 | $10.03 | ROCG - Roth CH Acquisition IV Co.
Aug 05 | $ 10.06 | NOVV - Nova Vision Acquisition Corp
Aug 05 | $ 9.95 | RVAC - Riverview Acquisition Corp.
Aug 04 | $ 9.95 | BWC - Blue Whale Acquisition Corp I
Aug 04 | $ 10.01 | GLEE - Gladstone Acquisition Corporation
Aug 03 | $ 9.88 | AMCI - AMCI Acquisition Corp. II
Aug 02 | $ 9.88 | HWEL - Healthwell Acquisition Corp. I

This Week's SPAC Votes
This week sees 9 SPAC deal votes with several trading at significant discounts to $10. Watch for the trend of high redemptions to continue for SPACs that go into verger votes with material price weakness.

Aug 09 | $ 10.09 | BCTG - BCTG Acquisition Corp. --> Tango Therapeutics
Aug 10 | $ 9.65 | CHFW - Consonance-HFW Acquisition Corp --> Surrozen, Inc.
Aug 11 | $ 9.51 | SRAC - Stable Road Acquisition Corp. --> Momentus, Inc.
Aug 11 | $ 10.03 | NBA - New Beginnings Acquisition Corp --> Airspan Networks Inc
Aug 11 | $ 9.83 | GRNV - GreenVision Acquisition Corp. --> Helbiz, Inc.
Aug 12 | $ 10.20 | BLUW - Blue Water Acquisition Corporation --> Clarus Therapeutics
Aug 12 | $ 9.98 | SAII - SOFTWARE ACQ GP --> Otonomo Technologies, Ltd
Aug 12 | $ 10.08 | CFAC - CF Finance Acquisition Corp. III --> AEye, Inc.
Aug 13 | $ 9.98 | NSH - NavSight Holdings, Inc --> Spire Global

SPAC Redemptions Continue to be Significant
SPAC redemptions continue to be significant which is creating a self-reinforcing trend of downward pressure on pre and post vote SPACs. At this point it feels a material risk for many of the pre-vote holders to try to hold through merger given the high redemptions, increasing number of cash minimum waives, and the inherent risks of having too little cash from the deal to realize the original vision. Add to that the increasing number of investors just playing SPACs for yield and 

42% - GORES HOLDINGS V, INC. / Ardagh Metal Packaging
84% - Reinvent Technology Partners Z / Hippo Enterprises Inc.
53% - Nebula Caravel Acquisition Corporation / Rover
30% - Dragoneer Growth Opportunities Corp / CCC Information Services Inc.
65% - Starboard Value Acquisition Corp / Cyxtera
90% - Roth CH Acquisition II Co. / Reservoir Holdings, Inc.
85% - Capitol Investment Corp V / States Title Holding, Inc.

Mixed Results on Recent De-SPACs
Recent de-SPACs have had mixed results, but for the most part you're still seeing significant pressure on the SPACs once the deal is complete. Some investors are starting to think that there is opportunity with de-SPACs that have been oversold based on overall market sentiment and dynamics. So, watch for de-SPACs with prices pushed low to have some potential bounce as investors make bets on a longer term bounce back with strong operating execution and results.

$ 11.49 | GRSV - GORES HOLDINGS V, INC. --> Ardagh Metal Packaging
$ 7.36 | RTPZ - Reinvent Technology Partners Z --> Hippo Enterprises Inc.
$ 8.84 | DGNR - Dragoneer Growth Opportunities Corp --> CCC Information Services Inc.
$ 11.27 | NEBC - Nebula Caravel Acquisition Corporation --> Rover
$ 8.78 | SVAC - Starboard Value Acquisition Corp --> Cyxtera
$ 7.38 | ROCC - Roth CH Acquisition II Co. --> Reservoir Holdings, Inc.
$ 7.51 | CAP - Capitol Investment Corp V --> States Title Holding, Inc.
$ 23.38 | CCIV - Churchill Capital Corp IV --> Lucid Motors
$ 11.65 | THCB - Tuscan Holdings Corp. --> Microvast, Inc.
$ 10.75 | VCVC - 10X Capital Venture Acquisition Corp --> REE Automotive Ltd.
$ 15.22 | GHVI - Gores Holdings VI Inc --> Matterport, Inc.
$ 11.59 | CMLF - CM Life Sciences Inc --> Sema4

Aging SPACs Could be a Yield Opportunity
There are an increasing number of pre-deal SPACs that are crossing the 1-year threshold and will need to find deals. While many of these are still from the vintage where a 24 month deadline was still the normal versus the increasingly common 18 months, the reality is that the pressure will start building and no sponsor will want their deals to drag. 

$ 10.02 | 14 months | BRLI - Brilliant Acquisition Corporation
$ 9.76 | 13 months | HPX - HPX Corp
$ 20.15 | 13 months | PSTH - Pershing Square Tontine Holdings
$ 9.79 | 13 months | ERES - East Resources Acquisition Company
$ 10.13 | 13 months | GRCY - Greencity Acquisition Corp
$ 9.87 | 13 months | ACEV - ACE Convergence Acquisition Corp
$ 9.76 | 13 months | ETAC - E.Merge Technology Acquisition Corp.
$ 9.77 | 13 months | PRPB - CC NEUBERGER PR
$ 9.87 | 12 months | HSAQ - Health Sciences Acquisitions Corporation 2
$ 9.75 | 12 months | GOAC - GO ACQUISITION
$ 9.76 | 12 months | RBAC - RedBall Acquisition Corp.
$ 9.87 | 12 months | BTAQ - BURGUNDY TC ACQ
$ 9.77 | 11 months | CSRA - Cohn Robbins Holdings Corp.
$ 9.75 | 11 months | PIAI - Prime Impact Acquisition I
$ 10.31 | 11 months | LEAP - Ribbit LEAP Ltd
$ 9.77 | 11 months | EQD - Equity Distribution Acquisition Corp
$ 9.85 | 11 months | OACB - Oaktree Acquisition Corp II
$ 9.76 | 11 months | NMMC - North Mountain Merger Corp
$ 9.75 | 11 months | PMVC - PMV Consumer Acquisition Corp

Friday's SPAC Movers

Biggest SPAC Gainers
4.02% ~ $ 10.88 | FTCV - FinTech Acquisition Corp. V (Announced)
2.66% ~ $ 10.43 | CND - Concord Acquisition Corp (Announced)
2.42% ~ $ 9.71 | SMIH - Summit Healthcare Acquisition Corp. (Pre-Deal)
2.33% ~ $ 9.65 | CHFW - Consonance-HFW Acquisition Corp (Announced)
1.41% ~ $ 10.09 | BCTG - BCTG Acquisition Corp. (Announced)
1.31% ~ $ 10.03 | XPDI - Power & Digital Infrastructure Acquisition Corp. (Announced)
1.21% ~ $ 10.84 | AGC - ALTIMETER GROWTH CORP (Announced)
1.18% ~ $ 17.20 | RICE - Rice Acquisition Corp. (Announced)
1.03% ~ $ 9.79 | VII - 7GC & Co. Holdings Inc. (Pre-Deal)
.93% ~ $ 9.78 | MACC - Mission Advancement Corp. (Pre-Deal)
.83% ~ $ 9.76 | SCOB - ScION Tech Growth II (Pre-Deal)
.81% ~ $ 9.96 | HCIC - Hennessy Capital Investment Corp. V (Announced)
.81% ~ $ 9.98 | ISAA - Iron Spark I Inc. (Pre-Deal)
.77% ~ $ 9.91 | ORIA - Orion Biotech Opportunities Corp. (Pre-Deal)
.73% ~ $ 9.70 | FACT - Freedom Acquisition I Corp (Pre-Deal)
.72% ~ $ 9.74 | IPVF - InterPrivate III Financial Partners Inc. (Pre-Deal)
.72% ~ $ 9.76 | NSTC - Northern Star Investment Corp. III (Pre-Deal)
.72% ~ $ 9.86 | SVFB - SVF Investment Corp. 2 (Pre-Deal)
.71% ~ $ 9.92 | DMYQ - dMY Technology Group, Inc. IV (Announced)
.70% ~ $ 10.03 | PANA - Panacea Acquisition Corp. II (Pre-Deal)

Biggest SPAC Losers
-7.16% ~ $ 9.59 | RTP - Reinvent Technology Partners (Announced)
-5.98% ~ $ 9.61 | DILA - Dila Capital Acquisition Corp (Pre-Deal)
-5.09% ~ $ 9.51 | SRAC - Stable Road Acquisition Corp. (Announced)
-3.63% ~ $ 9.83 | GRNV - GreenVision Acquisition Corp. (Announced)
-2.89% ~ $ 11.44 | FST - FAST ACQ CP (Announced)
-2.62% ~ $ 10.78 | MUDS - Mudrick Capital Acquisition Corporation II (Announced)
-1.90% ~ $ 9.81 | SPK - SPK Acquisition Corp. (Pre-Deal)
-1.52% ~ $ 9.68 | OHPA - Orion Acquisition Corp. (Pre-Deal)
-1.43% ~ $ 9.66 | ACAH - Atlantic Coastal Acquisition Corp. (Pre-Deal)
-1.30% ~ $ 9.86 | RACB - Research Alliance Corp. II (Pre-Deal)
-1.21% ~ $ 10.63 | PDAC - Peridot Acquisition Corp (Announced)
-1.02% ~ $ 9.70 | TIOA - Tio Tech A (Pre-Deal)
-1.02% ~ $ 9.75 | PMVC - PMV Consumer Acquisition Corp (Pre-Deal)
-.98% ~ $ 10.12 | VACQ - Vector Acquisition Corp (Announced)
-.90% ~ $ 9.90 | ATSP - Archimedes Tech SPAC Partners Co (Pre-Deal)
-.82% ~ $ 9.68 | EUCR - Eucrates Biomedical Acquisition Corp (Pre-Deal)
-.81% ~ $ 9.77 | CPAR - Catalyst Partners Acquisition Corp. (Pre-Deal)
-.81% ~ $ 9.81 | GTPA - Gores Technology Partners, Inc (Pre-Deal)
-.80% ~ $ 9.87 | NGC - Northern Genesis Acquisition Corp. III (Pre-Deal)
-.79% ~ $ 10.02 | KWAC - Kingswood Acquisition Corp (Pre-Deal)

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)