DraftKings entered into a formal corporate merger arrangement with Diamond Eagle Acquisition Corp, a publicly traded special purpose acquisition firm, and SBTech, a sports betting and gaming technology turnkey provider, merging the companies into one entity.
Institutional investors committed to a Class A common stock private investment of $30 m, with the combined company being valued at $3.3bn and having $500 m on hand after the transaction.
The combination is said to be the only vertically integrated U.S.-based pure-play sports betting and online gaming company.
It is expected that the deal will close in the first half of 2020. Diamond Eagle plans to change its name to DraftKings Inc. in conjunction with the closure, reincorporate in Nevada and remain Nasdaq-listed under a new ticker symbol.
Co-founder and CEO Jason Robins will continue to lead the new DraftKings and will maintain the management team of the company, including co-founders Paul Liberman and Matt Kalish.
“The combination of DraftKings’ leading and trusted brand, deep focus on customer experience and data science expertise and SBTech’s highly innovative and proven technology platform creates a vertically-integrated powerhouse,” said Robins.
“I look forward to building significantly upon our goals of continuing our state-by-state roll-out and creating the most entertaining and engaging customer experiences for sports fans globally.”
The proposed business merger was accepted unanimously by the respective boards of directors or managers of DraftKings, SBTech and Diamond Eagle, as applicable.
The agreement must take place in accordance with the terms and conditions of the DraftKings, SBTech and Diamond Eagle Combination Agreement.
This requires customary closing conditions, including the declaration of registration being considered valid by the Securities and Exchange Commission, the acceptance of DraftKings and SBTech and the Diamond Eagle stockholders by the shareholders or members, as applicable, and certain regulatory approvals.
Harry Sloan, founding investor of Diamond Eagle said: “We are pleased to bring DraftKings and SBTech together as one public company. DraftKings is already a premier online fantasy sports and betting platform.
“With the full integration of SBTech’s technology and innovative product expertise coupled with the right capitalisation, DraftKings will be in a great position to continue its ambitious expansion plans in the United States.
“I have known Jason Robins for four years, and consider him a true entrepreneur. I believe our investors share my utmost respect for his vision and leadership.”
Gavin Isaacs, SBTech’s chairman, added: “The combination of DraftKings and SBTech brings together two tech-native companies with the customer at their cores.
“SBTech will maintain its core business and continue its B2B focus. We are excited about the opportunity to join a company with a similar innovation DNA and create a unique and differentiated player in global sports betting and online gaming.”