Billionaire Tilman Fertitta floats entertainment empire in $6.7bn Spac deal

Houston billionaire Tilman Fertitta is returning his business empire to the public markets after a gap of more than a decade. Holding company Fertitta Entertainment, which includes Golden Nugget casinos and Landry’s restaurants, will be floated through a reverse-merger with a special purpose acquisition company.

The deal takes advantage of investor enthusiasm for Spac deals and values Fertitta Entertainment, whose restaurant chains include Del Frisco’s and Morton’s, at $6.7bn during a volatile time for both the gaming and restaurant industries.

Fertitta, which runs regional casinos in Nevada, Louisiana, and Mississippi, was walloped by the onset of the pandemic, according to an investor presentation accompanying the deal. Group revenues fell an estimated 40 per cent in 2020, it said.

Mr Fertitta’s personal empire also includes ownership of the National Basketball Association’s Houston Rockets and has propelled him to entrepreneurial fame, with his own programme on business network CNBC. The Rockets are not included in the public transaction, however.

Fertitta Entertainment’s merger with Fast Acquisition, a blank-cheque company that raised $200m in its initial public offering in August, will give Mr Fertitta a nearly 60 per cent stake worth more than $2bn.

“In today’s opportunistic world, I determined that in order to maximise the opportunities in the gaming, entertainment and hospitality sectors, it was preferable to take my company public,” Mr Fertitta said in a statement on Monday. He will remain chairman and chief executive.

Roughly three-quarters of Fertitta Entertainment group revenues — $3.41bn in 2019, pre-pandemic — are derived from the restaurant industry, which has been depleted during coronavirus-imposed shutdowns. Meanwhile, profits for the five regional casinos under the Golden Nugget division have fallen less sharply than those at larger global operators such as Wynn and MGM. 

In a presentation, the company said it was poised to benefit from the economic recovery as weaker restaurants have shuttered during the pandemic.

The Spac merger will make for the second public listing of Fertitta Entertainment, after Mr Fertitta took the organisation private in 2010. He had considered merging Golden Nugget/Landry’s with Caesars Entertainment two years ago but Caesars ultimately selected another bidder.

It is also not Mr Fertitta’s first tie-up with a Spac. Late last year, he spun off the mobile wagering segment of his business, Golden Nugget Online Gaming, through a public listing with the blank-cheque company Lancadia Holdings. Fertitta Entertainment still has voting control and ownership of about half of the outstanding shares of GNOG, worth roughly $700m.

The latest deal includes a fundraising of $1.24bn in new equity from a group of unnamed investors, which will go towards reducing the company’s debt to just above $3bn.

Fast Acquisition, a Spac founded by chain restaurant veterans Doug Jacob and Sandy Beall, will own 1 per cent of the public Fertitta Entertainment, while the undisclosed co-investor group will hold 35 per cent of shares.