Fertitta Entertainment Adds Restaurants to SPAC Deal, Value Vaults to $8.6B

Posted on: July 1, 2021, 08:20h. 

Last updated on: July 1, 2021, 10:40h.

Tilman Fertitta’s Fertitta Entertainment is adding several dining concepts to its previously announced merger accord with special purpose acquisition company (SPAC) FAST Acquisition (NYSE:FST). The owner of Golden Nugget Casinos and Landry’s restaurants is increasing the enterprise value of the target to $8.6 billion.

Fertitta Entertainment
Tilman Fertitta speaks during a 2020 interview with CNBC. Fertitta Entertainment is revising its merger agreement with FAST Acquisition. (Image: CNBC)

In February, the entertainment company revealed that’s merging with FAST in a transaction valuing it at $6.6 billion. The original agreement included the five land-based Golden Nugget casinos and some restaurants.

Landry’s owns more than 500 restaurants across the Bubba Gump’s, Chart House, Del Frisco’s, Mastro’s, and Morton’s brands, among others.

Businesses that will now contribute to the public company include the Mastro’s brand, the Aquariums, the Pleasure Pier, Vic and Anthony’s, and a handful of smaller restaurant concepts, adding a total of 42 incremental, high-quality business assets,” according to a statement issued by the companies.

FAST is also entering an agreement to purchase Catch restaurant, including Catch Steak, which is already 50 percent indirectly owned by Fertitta.

Big Increase for Fertitta

Owing to the amendment, Tilman Fertitta is receiving more equity in the soon-to-be publicly traded version of Fertitta Entertainment. His stake is increasing to 72 percent, up from 60 percent at the time the original agreement was announced in February.

Accounting for the revisions, Fertitta Entertainment will be one of the largest publicly traded leisure and hospitality companies when it comes to market. In addition to the Golden Nugget casinos, the company includes Fertitta’s stake in Golden Nugget Online Gaming (NASDAQ:GNOG), “over 500 restaurants, amusements, hotels, entertainment venues, and other business units,” and licensed dining concepts around the world.

At an enterprise value of $8.6 billion value, Fertitta Entertainment is positioned as the largest blank-check gaming deal to date, and one of the biggest SPAC transactions across any industry.

For his part, Fertitta is a significant player in the SPAC arena. His Landcadia Holdings II was the vehicle by which GNOG became a public company late last year, and he’s subsequently formed new Landcadia blank-check firms.

Speaking of SPACs, FAST investors apparently like the amended agreement, because shares of the blank-check company are higher by almost 12 percent in early trading.

Financial Forecast

Coinciding with news of the revised merger accord, Fertitta Entertainment revealed preliminary financial results for the June quarter, saying it expects pro forma revenue of $917 million to $920 million on adjusted pro forma earnings before interest, taxes, depreciation and amortization (EBITDA) of $270 million to $275 million.

The company estimates full-year adjusted EBITDA in excess of $800 million on the basis that “the contribution or acquisition of all of the operating businesses by the Company was completed as of January 1, 2021.”

Fertitta said the assets added to the merger agreement with FAST improve the operator’s cash flow, and no debt is being added as a result of the revisions.

The Securities and Exchange Commission (SEC) is slated to review the transaction in the third week of this month, with closure slated for some time in the fourth quarter.