Sports data provider Genius Sports Group agreed this week to go public in a SPAC merger with dMY Technology Group II valued at $1.5 billion.
The transaction is subject to dMY II’s shareholders voting in favor as well as to other customary closing conditions and is expected to close in the first quarter of 2021.
Headquartered in London, Genius Sports obtains data from sports events taking place around the world and supplies it to sports betting operators. The company has rights-to-official-data partnerships with some of the world’s largest sports leagues, including the English Premier League, FIFA, FIBA, NBA, NCAA, NASCAR, and more.
Genius Sports says it provides data on more than 240,000 events each year and is the official provider of data for over 170,000 of these events.
Under the terms of the merger agreement between Genius Sports and dMY II, shareholders in the two companies will exchange their shares for stock in a new combined company – NewCo – which will go public on the New York Stock Exchange. As mentioned above, the combined entity will be valued at approximately $1.5 billion or eight times Genius Sports’ projected revenue of $190 million.
The newly formed company is projected to have approximately $150 million of unrestricted cash and a substantially debt-free balance sheet after the combination closes.
Latest SPAC Merger
dMY II is a recently formed blank-check or special-purpose acquisition company (SPAC) led by former EMC Corp. executive Harry You and former Glu Mobile Inc. CEO Niccolo De Masi. The firm is understood to have held talks with investors about raising more than $300 million in new equity to finance its merger with Genius Sports.
SPACs such as dMY II raise money by going public and then hunt for a company to acquire and invest the funds they have raised.
Genius Sports’ SPAC merger is the latest deal of this kind announced by a gambling company in recent months. Another blank-check company led by Mr. De Masi and Mr. You, dMY Technology Group, announced in July a merger with US online casino and sports betting operator Rush Street Interactive.
In addition, DraftKings this spring closed a three-way combination with SPAC Diamond Eagle Acquisition Corp. and gambling technology provider SBTech and blank-check firm Landcadia II and Tilman Fertitta-owned online gambling business Golden Nugget Online Gaming, Inc. announced a similar deal in June.
SPACs have been making big moves in recent years and particularly in 2020 with several renowned players from different industries getting involved. Mergers with blank-check companies have become one of the hottest investment options out there because they give company management more control over pricing and are less costly, particularly at a time of severe economic disruptions caused by the Covid-19 pandemic.
It should also be noted that going public via traditional IPOs takes much longer – from several months up to more than a year – while SPAC mergers can only take a couple of weeks to be finalized.
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