Rush Street Interactive, casino and sports betting company, will be publicly traded on the New York Stock Exchange following a definitive agreement to merge with SPAC dMY Technology Group. It is anticipated that the merged business will have an overall enterprise value of around $1.78bn or the estimated $320 m 2021 sales of 5.6x RSI.
Neil Bluhm will continue to serve as Chairman of the Board of Directors after the completion of the merger, Greg Carlin will remain as CEO and Richard Schwartz will continue to serve as Chairman of the merged business. The board of directors of the new company will include dMY president Harry You and CEO Niccolo de Masi.
A mixture of cash and rollover equity in dMY would represent the compensation owed to RSI shareholders. After completing the deal, Bluhm and its affiliates would retain a controlling economic interest in the merged entity through an Up-C arrangement and a controlling voting interest. In turn, dMY will have its name changed to Rush Street Interactive.
Cash proceeds from the deal will consist of $230 m of cash-in-trust from dMY and an additional $160 m PIPE (private public equity investment) investment led by Fidelity Management and Research Company at $10 per share of dMY’s common stock.
Any cash proceeds from the acquisition that remain on the balance sheet of the merged entity are intended to be used to drive the growth of RSI in both domestic and foreign markets, fund marketing activities and provide additional working capital.
In compliance with the terms of the definitive agreement, up to $125 m of cash from the $160 m PIPE will be used to redeem equity from current RSI equity holders. The terms of the deal mandate that dMY will have at least $160 m in cash immediately before closing.
Carlin said: “We started RSI in 2012 to create a fun and engaging online experience for the US gaming customer and we now have a great opportunity to accelerate our growth in this dynamic market. We are looking forward to investing further in market expansion, product innovation, and growing our talented team.”
“RSI has achieved leading online casino and sportsbook market positions by focusing on what players want – a high-quality product, helpful customer service, and transparency and honesty,” noted Schwartz. “This transaction will help enhance and broaden our product offerings and attract more players.”
Bluhm stated: “This transaction with dMY Technology will provide RSI access to growth capital to allow for the expansion of the business in this fast-growing market and we expect it will serve our customers and investors well.”
Masi added: “With their dozens of years of online casino and sports wagering experience, RSI has developed a leading customer-focused online gambling platform. Harry and I are tremendously excited about RSI’s positioning and the long-term growth opportunity they have in the expanding US market.”
Rush Street ‘s attempt to go public comes in the footsteps of DraftKings and Golden Nugget, which have both listed on Nasdaq this year, and who have both followed the SPAC path to that purpose.
— Rush Street Interactive (@RSInteractive_) July 27, 2020