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Wynn Interactive goes public in deal to acquire Foley SPAC Austerlitz

Publication date: May 10, 2021, 03: 41 hrs.

Last updated: May 10, 2021, 04: 10 hrs.

Todd Shriber

Wynn Resorts (NASDAQ: WYNN) said today that entering into an agreement with special purpose acquisition company (SPAC) Austerlitz Acquisition Corp. I (NYSE: AUS) to take the gaming operator's interactive unit public.

Wynn Interactive
Financier Bill Foley. His acquisition of Austerlitz merges with Wynn Interactive. (Photo: Bloomberg )

In a deal with an estimated post-transaction enterprise value of $3.2 billion, Wynn Interactive will merge with the blank check company, eventually becoming a stand-alone entity listed on Nasdaq under "WBET." Austerlitz is controlled by Las Vegas Golden Nights owner Bill Foley.

Wynn Interactive currently has access to a market of 15 covers approximately 51 percent of the U.S. population and expects to gain access to additional states in the near future , making its reach approximately 77 percent of the U.S. population, "according to a statement released by operator Encore.

Under the terms of the deal, current Wynn Interactive shareholders will own 79 percent of the company, including 58 percent ownership by Wynn Resorts. The transaction includes approximately $640 million in cash from Austerlitz.

Wynn made the announcement the same day it reported first-quarter results - numbers that fell short of Wall Street expectations. The company reported a loss of $2. 53 per share generally accepted accounting principles (GAAP) basis, with revenue of 725. 78 million. Analysts were expecting a loss of $2. 11 on the sale of $ 759. 25 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) registered USD 58. 9 million, well below the consensus estimate of 82 0.3 million.

Wynn shares are slightly higher in Monday's after-hours session, while Austerlitz is up nearly three percent. Blank check names often crop up on deal announcements as these entities face two-year deadlines to complete mergers amid fierce competition to complete deals.

Foley does well on the promise

Foley is no stranger to the SPAC game. Last year, his Foley Trasimene Acquisition Corp. II unveiled plans to merge with fintech firm Paysafe Group Holdings Ltd. in a $9 billion deal. looking to enter the fast-growing industry in a dominant way. He's right about wanting to play at online casinos. While estimates vary widely as to how big the segment will ultimately be, it's clear that it will be much bigger than it is today. Goldman Sachs recently said that the North American online casino market is worth $1.9 billion today, but that amount will grow to $14 billion by 2033.

In a statement, Craig Billings, Wynn's chief financial officer, said the company is considering "what will ultimately be the $ 45 billion North American online sports betting and iGaming market. "

Wynn Interactive currently operates in six states and has a number of deals and smaller offerings designed to bolster its online casino and sports betting footprint.

Gaming SPAC Activity heats up again

While the pace seen last year is partly due to a cooling off in broader blank check activity, there are signs of life again in SPAC arena games.

In addition to the Wynn Interactive announcement, Super Group, Betway's parent, announced that it is merging with Sports Entertainment Acquis ition Corp. (NYSE: SEAH), while Sportsradar and Horizon Acquisition Corp. II (NYSE: HZON) are reportedly considering extending talks to bring this long-awaited deal home.

As for Wynn, it is following the template previously set by other casino operators who monetized iGaming units by taking those companies public through blank check mergers.

The Wynn Interactive transaction is expected to close by the end of this year.

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