Fertitta Entertainment, SPAC Mutually Agree to Scrap $8.6 Billion Merger

Posted on: December 10, 2021, 09:23h. 

Last updated on: December 10, 2021, 11:41h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Tilman Fertitta’s Fertitta Entertainment (FEI) and special purpose acquisition company (SPAC) FAST Acquisition (NYSE:FST) are ending an $8.6 billion combination. The deal would have served as the avenue for the owner of the Golden Nugget casinos to again be a publicly traded company.

Fertitta SPAC
Tilman Fertitta at the White House last year. His company and a SPAC are calling off an $8.6 billion merger. (Image: Eater Houston)

In a statement issued today, the blank-check firm and the Golden Nugget and Landry’s parent said the decision to end merger talks was mutual after a financial settlement was reached.

The settlement provides FAST and its shareholders up to $33 million through a combination of upfront and deferred payments, part of which is contingent on whether FAST ultimately effectuates a business combination transaction,” according to the statement.

The agreement includes a payment to the blank-check firm to cover termination-related expenses, as well as “a replenishment of the SPAC’s working capital account.”

Shell companies usually have two years to find a merger target or risk being liquidated and return capital to shareholders. FAST Acquisition went public in August 2020. The company said it will continue pursuing merger partners.

For FAST and Fertitta, Writing Was on the Wall

On Feb. 1, a deal valuing Fertitta’s gaming and restaurant empire at $6.6 billion was announced. In July, more Landry’s restaurants were added to the accord, bringing the value of the deal to $8.6 billion.

For the next several months, things were quiet, prompting speculation regarding why it was taking so long for the transaction to close. That changed early this month when FEI sent a letter to FAST saying it wanted to end the merger agreement. The blank-check company balked, saying delays were caused by Fertitta’s company, and that if FEI pursued termination, the SPAC intended to litigate the matter.

On Thursday, FAST delayed a shareholder vote scheduled for Dec. 14 at which investors were supposed to vote on the combination.

According to a regulatory filing, the source of the acrimony appears to be FAST requesting financial documents from FEI with a due date of March. The shell company claims Fertitta’s team didn’t furnish those materials until July, creating delays in the process.

All that is in the past, as what was slated to be one of the biggest blank-check deals it the gaming industry is no more.

What’s Next for FEI

In the statement, Fertitta sounded a conciliatory tone.

“At the end of the day, we ultimately determined that the right decision for my company was to remain private at this time, and I look forward to continuing to grow our business both organically and inorganically,” he said.

He took the Golden Nugget/Landry’s business private in a 2010 leveraged buyout, and chatter about another initial public offering (IPO) surfaced late last year. It’s not clear if he’ll pursue a listing for FEI in the future.

As for gaming SPACs, this isn’t the first time a deal didn’t come to fruition. Recently, Wynn Resorts (NASDAQ:WYNN) scuttled plans to bring its online gaming unit public via a blank-check merger. Earlier this year, sports betting data provider Sportradar (NASDAQ:SRAD) opted for a traditional IPO over a SPAC deal. Last year, Leisure Acquisition Corp. walked away from a deal with Canada’s Gateway Casinos & Entertainment.