Digital sports-betting platform DraftKings on Monday announced plans to merge with sports-betting and gaming technologies company SBTech and go public via a ready-to-trade special-purpose acquisition company called Diamond Eagle (DEAC) - Get Diamond Eagle Acquisition Corp. Class A Report in a $3.3 billion deal.
The agreement, first revealed in October, makes DraftKings the first and only pure-play sports betting and online gaming company based in the U.S. The transaction is expected to close in the first half of 2020.
The new entity will continue to be led by co-founder and CEO Jason Robins, and will retain DraftKings’ current management team, including co-founders Paul Liberman and Matt Kalish, the companies said. SBTech’s management team will also be integrated into the organization.
Institutional investors including funds managed by Capital Research and Management Co., Wellington Management Co. and Franklin Templeton have also committed to a private investment of $304 million in Class A common stock of the combined company.
With $400 million currently held in Diamond Eagle’s trust account, the combined company is expected to have an equity market capitalization at closing of approximately $3.3 billion, with more than $500 million of cash on its balance sheet.
Diamond Eagle, led by veteran media executive Jeff Sagansky and advised by former MGM CEO Harry Sloan, went public as a special purpose acquisition vehicle, or SPAC, earlier this year.
“We are pleased to bring DraftKings and SBTech together as one public company,” Sloan said in a statement. “With the full integration of SBTech’s technology and innovative product expertise coupled with the right capitalization, DraftKings will be in a great position to continue its ambitious expansion plans in the United States.”
On closing, Diamond Eagle will change its name to DraftKings Inc., reincorporate in Nevada and remain Nasdaq-listed under a new ticker symbol. Shares of Diamond Eagle were up 5.7% at $10.75 in morning trading on Monday.
It's not the first time DraftKings has sought to both merge and list. In July 2017, the company called off a deal with FanDuel after the Federal Trade Commission pledged to block the combination.
Founded in 2012 and headquartered in Boston, DraftKings is the country's largest daily fantasy sports provider in terms of entry fees and revenue. It offers contests in football, baseball, basketball, hockey, golf, stock car racing, mixed martial arts, soccer, Canadian football, and eSports.