Insights

Why DraftKings Stock Was a Good Bet This Week

What happened
There’s nothing like the close of a long-simmering acquisition for the health of a stock. So it was this week with online sports betting specialist DraftKings (NASDAQ: DKNG), whose share price was up by nearly 6% week to date as of Thursday night, according to S&P Global Market Intelligence. That was due in no small part to the patient company’s absorption of a big new asset.
So what
On Thursday, DraftKings announced — likely with plenty of relief — that its acquisition of peer Golden Nugget Online Gaming (GNOG) had been completed. That deal was agreed last August between DraftKings and GNOG’s former owner Fertitta Entertainment; it’s an all-stock transaction valued at nearly $1.6 billion.
Image source: Getty Images.

The acquisition only covers the online gambling facet of the storied Golden Nugget brand and not the brick-and-mortar casinos for which it’s more famous.
These will remain under the ownership of Fertitta Entertainment, which as part of the GNOG sale will enter into a commercial agreement with DraftKings. This positions DraftKings as the exclusive daily fantasy, sportsbook, and online gaming partner of the NBA’s Houston Rockets, another Fertitta Entertainment property.
In the press release trumpeting the deal’s finalization, DraftKings CEO Jason Robins said that owning GNOG “will enhance our ability to instantly reach a broader consumer base, including Golden Nugget’s loyal ‘iGaming-first’ customers.” GNOG has a database of over 5 million customers, according to its new owner.
Now what
“This deal creates meaningful synergies such as increased combined company revenues driven by additional cross-sell opportunities, loyalty integrations and tech-driven product expansion as well as technology optimization and greater marketing efficiencies,” Robins added. 
DraftKings provided precious few estimates for how the GNOG acquisition would affect its finances. It did say that the “expected synergies” would amount to $300 million at maturity.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened

There’s nothing like the close of a long-simmering acquisition for the health of a stock. So it was this week with online sports betting specialist DraftKings (NASDAQ: DKNG), whose share price was up by nearly 6% week to date as of Thursday night, according to S&P Global Market Intelligence. That was due in no small part to the patient company’s absorption of a big new asset.

So what

On Thursday, DraftKings announced — likely with plenty of relief — that its acquisition of peer Golden Nugget Online Gaming (GNOG) had been completed. That deal was agreed last August between DraftKings and GNOG’s former owner Fertitta Entertainment; it’s an all-stock transaction valued at nearly $1.6 billion.

Image source: Getty Images.

The acquisition only covers the online gambling facet of the storied Golden Nugget brand and not the brick-and-mortar casinos for which it’s more famous.

These will remain under the ownership of Fertitta Entertainment, which as part of the GNOG sale will enter into a commercial agreement with DraftKings. This positions DraftKings as the exclusive daily fantasy, sportsbook, and online gaming partner of the NBA’s Houston Rockets, another Fertitta Entertainment property.

In the press release trumpeting the deal’s finalization, DraftKings CEO Jason Robins said that owning GNOG “will enhance our ability to instantly reach a broader consumer base, including Golden Nugget’s loyal ‘iGaming-first’ customers.” GNOG has a database of over 5 million customers, according to its new owner.

Now what

“This deal creates meaningful synergies such as increased combined company revenues driven by additional cross-sell opportunities, loyalty integrations and tech-driven product expansion as well as technology optimization and greater marketing efficiencies,” Robins added. 

DraftKings provided precious few estimates for how the GNOG acquisition would affect its finances. It did say that the “expected synergies” would amount to $300 million at maturity.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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